New York, March 16: U.S. stock futures fell sharply after the Federal Reserve slashed interest rates and more companies and governments took action over the weekend to shut down European and American society in the face of the growing virus outbreak.

Futures for the S&P 500 fell 5% Sunday night and triggered a halt in trading. The Dow Jones Industrial Average fell 1,040 points, or 4.6%. The price of oil fell more than around 2% while gold gained about 1.2%.

Stocks are set for more turbulence following a dizzying week that saw the Dow twice fall by more than 2,000 points and also record it's biggest point gain ever — 1,985 points on Friday. The bull market that began in 2009 in the depths of the financial crisis came to an end. Europe markets saw similar volatility. Hang Seng Index: Hong Kong Stocks Suffer Losses as Federal Reserve Cuts Interest Rate.

Asia markets were mostly lower. Hong Kong's Hang Seng index declined about 2% while shares in South Korea and China slipped less than 1%. Shares in Australia dropped 4.3%. The country's prime minister announced new travel restrictions Sunday. Japan stocks rose slightly. The Bank of Japan has called an emergency meeting for noon local time Monday.

The Fed Sunday cut its key rate by a full percentage point — to a range between zero and 0.25% — and said it would keep it there until it feels confident that the economy can survive a sudden near-shutdown of economic activity in the United States.

The surprise announcement signaled the Fed's concern that the viral outbreak will depress economic growth in coming months and that it is prepared to do whatever it can counter the risks. The fact the Fed acted before a meeting scheduled for mid-week indicated its policymakers felt they needed to move immediately to shore up financial markets and investors' confidence.

Although U.S. stocks did recoup some of last week's losses with a big rally on Friday, most market watchers expected to see more volatility ahead with the number of coronavirus cases still rising in the U.S. and more industries facing a downturn in their business.

United Airlines said it needs to cut flying capacity by 50% in April and May and expects the cuts to extend into the summer travel season. American Airlines said it cutting international flying 75%. Walmart is limiting hours to ensure stores can keep sought-after items such as hand sanitizer in stock, while other retailers such as Urban Outfitters are closing stores altogether. Late Friday, Apple said it was closing all retail stores outside of China.

At the same time the U.S. and other countries further restricted travel and took other actions certain to curtail economic activity. In he U.S., the Centers for Disease Control and Prevention is recommending that gatherings of 50 people or more be canceled or postponed over the next eight weeks.

JPMorgan Chase now predicts the U.S. economy will shrink at a 2% annual rate in the current quarter and 3% in the April-June quarter. The U.S. has seen 64 deaths and more than 2,900 infections. Italy, the worst-hit European country, reported its biggest day-to-day increase in infections — 3,590 more cases in a 24-hour period — for a total of almost 24,747.

Besides cutting rates, the Fed will buy at least $500 billion of Treasury securities and at least $200 billion of mortgage-backed securities. This amounts to an effort to ease market disruptions that have made it harder for banks and large investors to sell Treasuries as well as to keep longer-term rates borrowing rates down.

The magnitude of the central bank moves indicated to some analysts that Chair Jerome Powell and other members of the Fed were worried about the health of the financial system. But others noted that the Fed was just reacting to signs the situation in Europe and the U.S. was only getting worse.

“The Fed's actions were very bold and it does appear to have spooked the markets,” said Nate Thooft, head of global asset allocation at Manulife Investment Management, adding that Fed signaled it was worried about both economic growth and the credit markets.

“Markets were going to be spooked anyway due to the scale of the shutdowns across the U.S. and sobering implications of a $20 trillion dollar economy that is about to grind down to a crawl,” said Yung-yu Ma, chief investment strategist at BMO Wealth Management.

“Also, developments in Europe are raising the prospect that what was just a week ago considered 'worst case' might be closer to 'base case' for the U.S.,” Ma said. “Big picture, the Fed's actions are all positive.”

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