Wall Street logs worst quarter since 2008 crisis S&P drop brings its loss for first 3 months of year to 20%

NEW YORK — Stocks fell Tuesday to close out Wall Street’s worst quarter since the most harrowing days of the 2008 financial crisis.

The S&P 500 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 last time economists were talking about the worst downturn since the Great Depression, when the S&P 500 lost 22.6% at the end of 2008.

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.

The big question is if markets will get worse. At this point, no one knows.

“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-off. 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.

Whether markets have found a bottom or whether investors have become too optimistic about the economic rebound coming after the viral outbreak peaks is impossible to say without knowing when the number of new infections will hit its peak.

“We’re kind of on this little milestone journey with markets,” said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Co. “First, we get the economic plan in place, then we have to start to see some of the containment actions pay off. At some point it’s going to be how do we get back to work.”

Among the next milestones for investors is Friday’s jobs report, which is expected to show a sharp drop in payrolls. Companies will also being reporting their earnings results for the first quarter in upcoming weeks, and analysts are looking for the steepest drop in profits since the start of 2016, according to FactSet.

The numbers may get even worse in the following quarter.

Goldman Sachs economists said Tuesday that they expect the U.S. economy to shrink 34% in the second quarter, but they expect growth to rebound in the third quarter.

The S&P

2,584.59.

The Dow Jones Industrial Average lost 410.32, or 1.8%, to 21,917.16, and the Nasdaq was off 74.05, or 1%, to 7,700.10.

“We’re still not even close to peak coronavirus in the U.S., which has already reported more cases than any other country and will sadly likely see a huge spike in the number of deaths,” said Craig Erlam, senior market analyst at OANDA Europe. “Huge challenges still lie ahead.”

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