Dow ends its worst quarter since the crash of 1987
It was the quarter from hell — and Wall Street had no idea it was coming.
US stocks slid on Tuesday, the final day of the first quarter, ending a historic roller-coaster ride that slammed all three major indexes into bear territory as the coronavirus pandemic startled investors with its surprise, rapid invasion of America.
The Dow Jones industrial average dropped 410.32 points, or 1.8 percent, to 21,917.16, leaving it down nearly 24 percent for the year. It was the Dow’s worst quarter since the crash of 1987 and the steepest first-quarter decline in the blue-chip index’s 135-year history.
The S&P 500 index, meanwhile, dropped 1.6 percent to 2,584.59, leaving it down more than 20 percent year to date with its worst first quarter since 1938. The tech-focused Nasdaq was on track to finish its worst first quarter since 2008 as it dropped as much as 0.8 percent Tuesday.
The heart-stopping selloff has recently slowed as signs emerge that lockdown measures are helping to slow the spread the coronavirus. But investors still face a rocky future given that the disease has yet to peak in the US, where it is expected to gut the economy in the coming months.
“This bear market skipped the foreplay,” said Jim Paulsen, chief investment strategist at the Leuthold Group. “It went right to the end, and it did so because it was pretty obvious right away that we were going to have a recession.”
Tuesday’s drop in stocks came as the number of US coronavirus deaths topped 3,100, surpassing the death toll from the 9/11 terror attacks, according to data compiled by Johns Hopkins University. The virus has killed 1,550 people in New York alone, where the crisis isn’t expected to peak for one to three more weeks, Gov. Andrew Cuomo said Tuesday.
The grim death toll was accompanied by a Goldman Sachs prediction the US economy would shrink by 34 percent on an annualized basis in the second quarter amid the virus crisis. The bank also expects the unemployment rate to skyrocket to 15 percent by the middle of the year, up from 3.5 percent in February, according to Bloomberg.
But investors also digested signs that there’s light at the end of the tunnel. Dr. Anthony Fauci, the federal government’s top infectious disease expert, said there are “glimmers” that the nation’s social-distancing protocols are working. And Chinese manufacturers reported a stronger improvement in factory activity in March than expected after the virus slammed the industry in February.
“Investors could be picking and choosing here, but the stories they seem to be picking are the stories with positive news and they’re rejecting the stores with negative news,” said Chris Rupkey, chief financial economist at MUFG Union Bank. “So that’s also a good sign in terms of signaling a turn in investor sentiment to be more positive.”
When the closing bell rang Monday, the Dow had climbed 22.5 percent from the intraday low of 18,213.65 it hit last week, which marked a 38.4 percent tumble from the all-time high reached just last month.
But experts say the market could test or break through the recent floor amid lingering uncertainty about the virus and just how badly it will damage the economy.
“Despite today’s stock market resilience, this is still probably a bear market rally,” OANDA senior market analyst Ed Moya wrote in a commentary. “The economy will take a lot longer to restart and the impact onto the American consumer will be lasting.”
With Reuters