US stock markets fell sharply on Tuesday on worries that even a half percentage-point cut in interest rates might not be enough to stave off the economic impact of the coronavirus outbreak and halt the worst sell-off in more than a decade.

It was the Federal Reserve's first emergency rate cut since the 2008 financial crisis, underscoring how grave the central bank views the fast-evolving situation.

Stocks initially jumped more than 1% on the news, but gains soon petered out as analysts and traders worried whether pumping more money into financial markets would address the central problem - a cut in business activity as workers and consumers stay home.

"The market reaction now is negative because the Fed sent the wrong message to the market," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

Bank stocks, which tend to outperform when interest rates are higher, dropped 3.4%, while the broader financials sector fell 2.6%. Five of the 11 major S&P sectors were trading higher.

At 11:47 a.m. ET, the Dow Jones Industrial Average was down 403.67 points, or 1.51%, at 26,299.65, the S&P 500 was down 39.53 points, or 1.28%, at 3,050.70. The Nasdaq Composite was down 107.02 points, or 1.20%, at 8,845.14.