Corona Virus and US Economy: U.S. Close Sharply Lower After Surprise Interest Rate Cut -"revealing major weaknesses US Economy"

After seeing considerable volatility early in the session, stocks moved sharply lower over the course of the trading day on Tuesday. With the pullback on the day, the major averages partly offset the strong gains posted in the previous session.

The major averages finished the day firmly in negative territory but off their lows of the session. The Dow tumbled 785.91 points or 2.9 percent to 25,917.41, the Nasdaq plunged 268.07 points or 3 percent to 8,684.09 and the S&P 500 slumped 86.86 points or 2.8 percent to 3,003.37.

The sell-off on Wall Street came after the Federal Reserve announced a surprise decision to cut interest rates by 50 basis points to 1 to 1-1/4 percent.

Read more: U.S. Close Sharply Lower After Surprise Interest Rate Cut | Nasdaq

USA: Fed raises interest rates, signals more hikes ahead

After weeks of market volatility and calls by President Donald Trump for the Federal Reserve to stop raising interest rates, the U.S. central bank instead did it again, and stuck by a plan to keep withdrawing support from an economy it views as strong.

U.S. stocks and bond yields fell hard. With the Fed signaling "some further gradual" rate hikes and no break from cutting its massive bond portfolio, traders fretted that policymakers could choke off economic growth.

"Maybe they have already committed their policy error," said Fritz Folts, chief investment strategist at 3Edge Asset Management. "We would be in the camp that they have already raised rates too much."

Interest rate futures show traders are currently betting the Fed won't raise rates at all next year.

Wednesday's rate increase, the fourth of the year, pushed the central bank's key overnight lending rate to a range of 2.25 percent to 2.50 percent.

Note EU-Digest: " In New York, U.S. S&P 500 Index lost 1.54 percent to hit its lowest level since September 2017. U.S. stocks are on pace for their biggest December decline since 1931, the depths of the Great Depression ".

Read more: - by Ann Saphir and Howard SchneiderFed raises interest rates, signals more hikes ahead