U.S. stocks slumped Tuesday, on pace for their worst quarter since the depths of the financial crisis amid the coronavirus pandemic.
The Standard and Poor’s 500 fell 0.5%. Heading into Tuesday, the broad index is off nearly 19% this quarter, on track for its worst such period since 2008 and its biggest first-quarter drop since 1938.
The Dow Jones industrial average dropped 75 points. The blue-chip average has shed nearly 22% in the first three months of the year, on track for its worst first quarter ever.
Tuesday’s losses cut into recent gains after the number of American coronavirus deaths surged past 3,100. A worrying increase in the number of Spanish deaths linked to the virus also weighed on market sentiment again.
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Stocks snapped the longest-ever bull market in history this month, swiftly retreating from records in mid-February after the outlook for the U.S. economy dimmed. The pandemic forced lockdowns and travel restrictions, weighing on businesses across the world.
The economy has come to a standstill, jeopardizing the longest U.S. economic expansion in history. S&P Global Ratings forecasts a record downturn in the second quarter with a recovery taking hold in the second half of the year and into 2021. The firm projects GDP growth for 2020 to contract 1.3%, including a 12% decline in the second quarter from the first.
“The industries most vulnerable to social distancing and the collapse in global demand, such as airlines, transportation, and retail, or those heavily dependent on cross-border supply chains are likely to suffer most, both from slumping cash flows and much tighter financing conditions,” Paul Gruenwald, global chief economist for S&P Global Ratings, said in a note.
The U.S. had more than 164,000 confirmed cases early Tuesday, according to the Johns Hopkins University data dashboard. Worldwide, more than 800,000 people have been infected with the virus and more than 38,000 have died.
Countries across the world have shut down entire segments of their economies in an effort to delay or mitigate the impact of the pandemic. Many of the jobs most impacted by social-distancing measures, such as cashiers, restaurant workers and hotel staff, are in the services sector, which makes up about 80% of U.S. jobs, according to LPL Financial.
“Jobs are likely to return quickly once the economy gets going again, but we know the timing of that is uncertain,” analysts at LPL Financial said in a note. “Until then, backstops from federal programs and support for businesses to help minimize further layoffs will be essential for millions of Americans.”
Traders say volatility could pick up Tuesday as money managers rebalance their portfolios toward stocks on the final day of trading in the first quarter. On Monday, both U.S. indexes closed up by more than 3%.
Benchmark U.S. crude added $1.40 to $21.49 a barrel after touching its lowest price since 2002. Oil started the year above $60 and has plunged on expectations that a weakened economy will burn less fuel. The world is awash in oil, meanwhile, as producers continue to pull more of it out of the ground. Brent crude, the international standard, picked up 73 cents to $23.49 per barrel.
In Europe, Germany’s DAX index was up 0.1%. Britain’s FTSE 100 rose 0.8%, while the CAC-40 in France fell 0.1%. Japan’s benchmark Nikkei 225 fell nearly 0.9%. Hong Kong’s Hang Seng added 1.9% and the Shanghai Composite inched up 0.1%.
Contributing: The Associated Press