Trading on the New York Stock Exchange was halted for 15 minutes after the Dow Jones fell 9.7 per cent – more than 2,250 points – and the S&P dropped 8 per cent on opening on Monday morning.

The plunge comes a day after the Federal Reserve cut interest rates to zero in an effort to stabilise the markets following weeks of turmoil caused by the growing coronavirus crisis and concern at the slow reaction of governments, including the US.

In a statement on Sunday, the US central bank said: “The coronavirus outbreak has harmed communities and disrupted economic activity in many countries ... The Federal Reserve is prepared to use its full range of tools to support the flow of credit to households and businesses.”

Appearing at a news conference on Sunday afternoon shortly after the announcement, Donald Trump praised the decision, saying: “It makes me very happy.

“And I think that people in the market should be very thrilled. And that brings us – we’re the strongest country in the world, by far, financially and every other way. And that brings us in line with what other countries are. They’re actually – they actually have negative rates. But, look, we got it down to potentially zero. So that’s a big step, and I’m very happy they did it.”

However, some analysts suggested on Monday that the move could have raised fears rather than dampened them.

Vishnu Varathan of Mizuho Bank said in a report quoted by the Associated Press that “despite whipping out the big guns” the Fed’s action was “falling short of being the decisive backstop for markets”.

“Markets might have perceived the Fed’s response as panic, feeding into its own fears.”

On Sunday the Fed also said it also would buy at least $500bn of Treasury securities and $200bn of mortgage-backed securities to help calm the Treasury market, which is a bedrock for the world’s financial system and influences stock and bond prices around the world.

As the spread of coronavirus causes the shutdown of businesses and a fall in consumer spending, economists have been slashing their expectations for upcoming months.

JPMorgan Chase says the US economy may shrink at a 2% annual rate this quarter and 3% in the April-through-June quarter. To many investors, that meets the definition of a recession.

Strategists at Goldman Sachs say the S&P 500 could drop as low as 2,000 in the middle of the year, which would be a 41% drop from its record set just a month ago, before rallying back to 3,200 at the end of the year.

The Associated Press contributed to this report