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Dow Suffers Sharpest Quarterly Plunge in Over 3 Decades

Dow Suffers Sharpest Quarterly Plunge in Over 3 Decades
(Dreamstime.com)
 

Tuesday, 31 March 2020 04:41 PM

Wall Street's three major indexes tumbled on Tuesday, with the Dow registering its biggest quarterly decline since 1987 and the S&P 500 suffering its deepest quarterly drop since the financial crisis on growing evidence of massive economic damage from the coronavirus pandemic.

In one of the fastest turns into a bear market, the S&P 500 and the Dow both ended the first quarter more than 20% below the end of 2019, as the health crisis worsened in the United States and brought business activity to a standstill.

It was also the S&P's biggest first-quarter decline on record as consumers were advised to stay at home, leading businesses to announce temporary closures and massive staff furloughs.

As a result, economists have slashed 2020 growth expectations and investors, eying dismal quarterly financial reports, fear corporate defaults and mass layoffs would lead to a deep recession.

An unprecedented round of fiscal and monetary stimulus had helped equity markets edge higher last week following wild swings that saw the benchmark S&P 500 rise 9% and slump 12% in two consecutive sessions.

But this was not enough to give investors confidence.

"After the battering we've taken in the last month, people aren't willing to make big bets in any direction right now, especially since we'll have more insight from commentary in early earnings reports starting next week," said Carol Schleif, deputy chief investment officer at Abbot Downing in Minneapolis.

Many investors were also likely being cautious ahead of the release of jobless claims data on Thursday and the March non-farm payroll report on Friday, said Steven DeSanctis, a strategist at Jefferies.

"We're leading into the end of the week that's going to have more of the fireworks," he said.

The Dow Jones Industrial Average fell 410.32 points, or 1.84%, to 21,917.16, the S&P 500 lost 42.06 points, or 1.60%, to 2,584.59 and the Nasdaq Composite dropped 74.05 points, or 0.95%, to 7,700.10.

The technology-heavy Nasdaq registered its biggest quarterly decline since the end of 2018.

The utilities and real estate sectors were among the biggest decliners on Tuesday, with 4% and 3% declines respectfully following a recent rally, when investors sought ways to weather the economic slump.

The energy index rose nearly 1.6%, boosted by a rebound in prices on the day although crude oil benchmarks ended a volatile quarter with their biggest losses in history, as both U.S. and Brent futures were hammered throughout March by the coronavirus pandemic and the eruption of a price war between Russia and Saudi Arabia.

After bouncing between gains and losses, the technology sector ended the day down 1.9%.

Declining issues outnumbered advancing ones on the NYSE by a 1.25-to-1 ratio; on Nasdaq, a 1.04-to-1 ratio favored decliners.

The S&P 500 posted one new 52-week high and no new lows; the Nasdaq Composite recorded 14 new highs and 37 new lows.

On U.S. exchanges 13.13 billion shares changed hands compared with the 15.75 billion average for the last 20 sessions.

GLOBAL MARKETS

Global stock markets fell in volatile trading, and the economic damage from the coronavirus pandemic left the MSCI benchmark of world equities with its biggest quarterly decline since the financial crisis of 2008.

Oil prices remained near their lowest levels since 2002 as a worldwide economic slowdown and travel restrictions sapped demand. Crude futures ended the quarter down nearly 70% after record losses in March. Government bond yields held steady as investors remained cautious about buying riskier assets.

Stocks have rallied since the start of last week but remain down more than 20% year to date. European equities finished their worst three months since 2002, while Britain's FTSE index posted its largest quarterly drop since 1987.

MSCI's gauge of stocks across the globe shed 0.48%.following modest gains in Europe and steep declines in Asia. The index fell nearly 22% for the quarter.

"Stocks have been on a wild ride ... not surprisingly, investors are split on whether to lean into or fade the current rally," said Jonathan Golub, chief U.S. equity strategist at Credit Suisse Securities in New York.

The number of coronavirus infections globally headed toward 800,000. Deutsche Bank analysts noted, however, that for two consecutive days, the global growth in new cases was below 10%, after exceeding that for most of the past two weeks.

Health officials were much more cautious. A World Health Organization official warned that even in the Asia-Pacific region, the epidemic was "far from over."

Government bond yields dipped slightly, with U.S. benchmark 10-year notes up 1/32 in price to yield 0.6679%, from 0.671% late Monday.

"In spite of the significant sell-off of most growth-oriented assets since mid-February, we are concerned there is further downside ahead," said Salman Baig, an investment manager at Unigestion.

"The violent market action should not be understated, but the underlying cause – an accelerating pandemic requiring large parts of the economy to shut down – is still with us."

Oil prices stabilized after the United States and Russia agreed to talks to stabilize energy markets a day after crude futures hit 18-year lows. Oil has been hit by a double whammy, with U.S. crude at one point falling below $20 a barrel on Monday, as the virus outbreak has cut global demand even as Saudi Arabia wages a price war with Russia.

Brent crude dipped $0.02, or 0.1%, at $22.74 a barrel. U.S. crude climbed 1.4%, to $20.38 a barrel, after closing Monday at $20.09, its lowest since February 2002.

The dollar, measured against a basket of currencies, strengthened 0.4% to 99.652.

© 2020 Thomson/Reuters. All rights reserved.


   
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Wall Street's three major indexes tumbled on Tuesday, with the Dow registering its biggest quarterly decline since 1987 and the S&P 500 suffering its deepest quarterly drop since the financial crisis on growing evidence of massive economic damage from the coronavirus pandemic.
wall street, stock, market, virus, dow
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2020-41-31
Tuesday, 31 March 2020 04:41 PM
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