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U.S. stock sank as investors awaited progress on a spending package from Congress to tackle the economic fallout from the coronavirus. Measures of corporate credit risk eased and the dollar fell after the Federal Reserve announced a massive second wave of initiatives to support a shuttered American economy.

The S&P 500 dropped even after the Fed’s move helped futures wipe out a loss that reached 5% overnight when Congress failed to agree on a stimulus bill. Republicans continued to negotiate the deal after Democrats blocked the first effort. The index has now erased all gains during Donald Trump’s presidency.

“The equity market is reacting to the news of the stalemate between Democrats and Republicans about how to target funding,” said Nela Richardson, an investment strategist at Edward Jones. “A stalemate is good for no one.”

The central bank said it will buy an unlimited amount of bonds to keep borrowing costs low and set up programs to ensure credit flows to corporations and state and local governments. Spreads on credit default swaps tightened and bond ETFs eligible for Fed purchases rallied. Treasuries erased a surge after Steven Mnuchin said increased issuance is coming to fund stimulus measures.

“Today’s announcement will go a long way to reassuring investors the Fed has their backs and will stop the growing credit crisis in its tracks,” said Chris Rupkey, chief financial economist for MUFG Union Bank. “Yield spreads should narrow and the stock market should rest easier now that the Federal Reserve is giving it all it’s got.”

The Stoxx Europe 600 fell as the continent’s leaders scrambled to enforce more curbs on people’s movements and Italy began shutting most industrial production. Core European bonds climbed. Equities fell earlier across most of Asia, where India’s benchmark plunged a record 13% while the rupee sank to the lowest ever amid moves to lock down widespread areas of the country. Brent crude extended losses after its 20% decline last week.

Investors are beginning another dramatic week digesting slashed economic forecasts and news of Europeans struggling to curb the pandemic, with Italy and Spain reporting 2,000 deaths over the weekend between them. Warnings grew that a global recession is coming as cities from New York to Los Angeles all but shut down and cases rise rapidly outside Asia.

“Markets remain focused on the newsflow around the virus, especially in Italy and other places that saw earlier outbreaks, and on growing stresses in financial markets,” said Christian Mueller-Glissmann, managing director in portfolio strategy at Goldman Sachs in London. “Those include dollar-funding markets with spillovers to FX and EM but also credit markets, which are dealing with unprecedented sharp moves and large outflows.”

Before the Fed news, focus had been on the main American political parties failing to agree on a quick jolt to the sinking economy with a $2 trillion stimulus. Morgan Stanley warned the epidemic could cause GDP to shrink a record 30% in the second quarter. Federal Bank of St. Louis President James Bullard said the jobless rate may hit 30% and growth could even halve to $2.5 trillion during the three-month period.

Meanwhile, international air carriers continued to announce drastic measures to cope with the outbreak, with giants Emirates and Singapore Airlines Ltd. among the latest to slash flights, and jet maker Airbus SE withdrawing its earnings guidance.

“As difficult as it is to sit in cash, that’s certainly what I’m doing,” Brian Quartarolo, portfolio manager at Pilgrim Partners Asia, told Bloomberg TV. “I’m presently in New York, and the fear is palpable—it’s rising and there doesn’t seem to be anyone who thinks that this virus effect is anywhere near peaking yet, particularly here in the States.”

It’s official: S&P 500 erases all gains during Trump’s presidency

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