US stocks extended tenuous gains yesterday, with the Federal Reserve said to be close to reintroducing additional crisis-era tools to stabilise financial markets roiled by the coronavirus.
Treasuries slipped and stresses appeared in the short-term funding and front-edit credit markets.
Investors continue to struggle to adjust to an unprecedented upheaval in social interactions that looks set to plunge the world into a recession. The S&P 500's gain topped 2pc as of yesterday morning, an advance it wiped out earlier in the session.
The Dow Jones Industrial Average tumbled below 20,000 for the first time since early 2017 before trading little changed.
Treasuries declined, reversing part of a nearly 25 basis- point surge on Monday. The three-month dollar Libor rate jumped the most since 2008, and similar maturity cross currency basis swaps for euro-dollar, a proxy for how expensive it is to get the greenback, traded at the widest since 2011.
"What a crazy day, people just don't know what to do," said Matt Maley, equity strategist at Miller Tabak and Co.
"There's confusion. People don't have a good idea about the future fundamentals. Right now, because of the coronavirus, we have no idea."
With the coronavirus grinding the global economy toward a stand-still and central banks dramatically stepping up efforts to stabilise capital markets and liquidity, traders are now clamouring for fiscal stimulus, particularly in the United States.
The Trump administration has asked Congress for $850bn (€775bn) to combat the virus's effects, a third attempt to juice government spending.
Data showed US retail sales fell in February, indicating the main driver of the economy, consumer spending, had begun to slow even before outbreak containment measures began.
Companies began to scramble for cash, with Kraft Heinz, Caesars and MGM drawing down credit lines.