U.S. stocks and government bond yields slid Tuesday after the Federal Reserve’s interest-rate cut failed to assuage money managers fearful of the economic fallout from the coronavirus epidemic.

The Fed’s move sparked a frenzy of trading. Stocks initially shot higher, propelling the Dow Jones Industrial Average up more than 350 points. But within 15 minutes, stocks’ initial gains gave way to jerky up-and-down trading action—with the blue-chip average and Treasury yields tumbling after Fed Chair Jerome Powell acknowledged...