U.S. financial markets fell on Monday despite the Federal Reserve saying it would further intervene to help lessen the blow of the coronavirus pandemic on the economy.
The Dow Jones Industrial Average dropped more than 582 points, or just over 3%, at the close. The S&P 500 fell by 2.93%. The Nasdaq closed down by 0.27%.
The slide comes as Democratic lawmakers blocked, for the second time in 24 hours, a GOP-backed "phase three" $2 trillion coronavirus relief measure in its current form.
Late Sunday night, Dow futures plummeted below the 5% limit-down threshold after the initial bipartisan talks on the economic stimulus package broke down.
Early Monday, however, there was a spike in premarket trading after the Fed announced a series of additional measures to boost the economy.
In a statement, Fed said it would purchase Treasury securities and mortgage-backed securities "in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy."
The Fed has previously pledged to slash interest rates and launch a short-term lending facility amid the coronavirus crisis.
"While the road ahead will be a bumpy path, we believe we are at the tail end of the extreme volatility and in the early phases of a bottoming process," Andrew Smith, the chief investment officer at Delos Capital Advisors, told clients.
"With the expected fiscal policy response and Federal Reserve liquidity infusion, financial markets should begin to find solid footing," he added. "We urge market participants to be mindful of buying stocks too early as these next few weeks are typically met with a re-test of market lows as economic data begins to emerge."
William Foster, vice president at Moody’s Investor Services, said the outbreak will likely have "a significant negative impact" on global economic growth even with central bank intervention.
"The Federal Reserve’s aggressive policy response, including its most recent announcements to provide liquidity support to corporate and municipal credit markets, will help mitigate the economic damage from the outbreak," Foster said in a statement Monday. "Pending government fiscal stimulus measures will provide additional support. Nonetheless, we expect the virus to have a significant negative impact on growth this year. We will keep monitoring the situation and assess changing conditions on a continuing basis."
The COVID-19 pandemic has plunged the Dow, S&P 500 and Nasdaq into bear market territory. All three indices have tumbled roughly 30% from February highs.