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| - After its worst week since 2008 amid fears of widespread disruptions from the coronavirus outbreak, Wall Street bounced back at the open on Monday with traders hoping for central bank intervention. But the rally appeared fragile, as the benchmark Dow Jones Industrial Average briefly plunged into the red then re-emerged to gain once again. About 45 minutes into the first trading session of the week, the Dow Jones Industrial Average was up 0.5 percent to 25,524.74, after losing 12.4 percent in last week's rout. The broad-based S&P 500, which lost 11.5 percent last week, regained 0.2 percent to 2,960.11, while the tech-rich Nasdaq bounced 0.2 percent to 8,587.23, after falling 10.5 percent. Major tech and financial companies led the Wall Street rally, with Apple up 3.1 percent, Microsoft gaining 2.1 percent and Visa rising 1.2 percent. As deaths rose in China, Iran and the United States, the toll from the COVID-19 outbreak reached 3,000 with 89,000 people infected in more than 60 countries, raising fears of a global economic slowdown. The virus has led some businesses and factories to slow or stop production in China, leading central banks to step up efforts to calm nervous investors. On Friday, US Federal Reserve Chair Jerome Powell said the central bank "will use our tools and act as appropriate to support the economy." While equity markets would no doubt appreciate a rate cut, economist Joel Naroff said such a decision would be a "panic move" that would not address the unique circumstances of the viral outbreak. "Every cut reduces the Fed's ability to move when the economy not only slows but has no way out of the downturn," Naroff said, arguing that once the epidemic passes "much if not most of the impediments to growth will pass as well, and the economy will be able to revive without any help." The fear is the epidemic is a causing a real hit to growth, a view supported by data: US manufacturing activity slowed in January, with many firms citing supply chain issues inhibiting output, according to the Institute of Supply Management's monthly survey. ISM's manufacturing index fell to 50.1 percent, just barely above the threshold indicating growth. Mickey Levy of Berenberg Capital Markets agreed with Naroff that interest rate cuts will not work. "We emphasize that the coronavirus is a negative real supply shock to China and some other regions that is rippling through the global economy and cannot be fixed by monetary policy easing," Levy said in a commentary. cs/hs
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