With the major stock indices tumbling lower on Monday, following a gap down in the overnight session after additional cases of the coronavirus were confirmed over the weekend, including one more in California, heightening concerns over the virus’ impact on the world economy, the Federal Reserve may be in the spotlight to soothe markets this week.

This Wednesday is the FOMC meeting, and while he Fed is not expected to take any action to adjust its benchmark fed funds rate this week, it will most likely reassure markets that it is overseeing the outbreak of the coronavirus and other geopolitical uncertainties, and could be ready to take action if necessary.

The Fed commences its two-day meeting Tuesday. But Fed Chairman Jerome Powell is set to speak with the press after the FOMC meeting Wednesday afternoon, and as is typical, those comments should key investors in to the Federal Reserve’s insight.

“They might say something about paying attention to global developments, but I wouldn’t expect them to do anything at this point,” said Ed Keon, chief investment strategist at QMA. Strategists expect the Fed has been watching tensions in the Middle East and now the coronavirus.

“They’re looking at the global economy and it doesn’t look like it will have much affect at the moment,” he said.

Still, stocks were broadly impacted by the news, with the Dow Jones Industrial Average falling over 350 points, led lower by American Express. The 30-stock average was down more than 500 points earlier in the day. The S&P 500 lost a similar 1.2% while the Nasdaq Composite fell 1.5%.

“China is the biggest driver of global growth so this couldn’t have started in a worse place,” said Alec Young, managing director of global markets research at FTSE Russell. “Markets hate uncertainty, and the coronavirus is the ultimate uncertainty in that no one knows how badly it will impact the global economy.”

Rick Rieder, BlackRock’s global CIO of fixed income noted that he anticipates more Fed officials to worry about their policy resulting in overly relaxed financial conditions, which could boost stocks and tighten credit spreads. “My sense is that’s going to be very slow in incubating that idea.”

“The one thing I’ve got my eye on is I think at some point in the next couple of months, assuming what is happening now is a relatively near term risk, I think a lot of the discussion is going to head toward financial conditions,” Rieder said. “You’ve had some of the Fed members talking about financial conditions.”

For those investors who are concerned about the coronavirus’ effect on markets but are looking for an ETF that allows them to stay invested, the Invesco Defensive Equity ETF (DEF) could be a suitable choice.

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