Stocks drop, end a scary quarter
U.S. stocks fell Tuesday, closing out Wall Street’s worst quarter since the most harrowing days of the 2008 financial crisis.
The benchmark Standard & Poor’s 500 index dropped a final 1.6%, bringing its loss for the first three months of the year to 20%, as predictions for the looming recession caused by the coronavirus outbreak got even more dire. Stocks haven’t had this bad a quarter since the S&P 500 dropped 22.6% at the end of 2008 — the last time economists were talking about the worst downturn since the Great Depression.
The surge of coronavirus cases around the world has sent markets to breathtaking drops since mid-February, undercutting what had been a good start to the year. Earlier in the quarter, the major U.S. indexes climbed to record highs on expectations that the economy was accelerating because of calming trade wars and low interest rates around the world.
The price of benchmark U.S. crude oil dropped by roughly two-thirds this quarter on expectations that a weakened economy will need less fuel. The yield on the 10-year Treasury slid below 1% for the first time as investors scrambled for safety, and it ended the quarter at roughly 0.67%.
The big question is whether markets will get worse.
“People are trying to digest the length and magnitude of what the coronavirus impact is going to be,” said George Rusnak, managing director of investment strategy at Wells Fargo Private Bank.
The steep drops from Tokyo to Toronto in recent weeks reflect investors’ understanding that the economy and corporate profits are in for a sudden, debilitating drop. Economies around the world are grinding to near standstills as businesses close their doors and people hunker down at home in hopes of slowing the spread of the virus.
But markets have also cut their losses in recent weeks on hopes that massive aid from governments and central banks around the world can blunt the blow. The S&P 500 was down nearly 31% for the quarter at one point, but it has climbed 15.5% since March 23.
Among the next milestones for investors is Friday’s U.S. jobs report, which is expected to show a sharp drop in the number of people on payrolls. Companies will also begin reporting firstquarter earnings in upcoming weeks, and analysts expect the steepest drop in profits since the start of 2016, according to FactSet.