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Dow caps worst-ever first quarter with a more than 400-point slide

A view of the New York Stock Exchange. The Dow Jones industrial average plunged roughly 1.9 percent Tuesday, for the worst first-quarter finish of its 135-year history.
A view of the New York Stock Exchange. The Dow Jones industrial average plunged roughly 1.9 percent Tuesday, for the worst first-quarter finish of its 135-year history.ANGELA WEISS/AFP via Getty Images

WASHINGTON — Wall Street concluded one of its worst-ever starts to a year on Tuesday with markets staggering under trillions in losses from an economy paralyzed by the coronavirus.

The Dow Jones industrial average plunged more 400 points, or roughly 1.9 percent, for the worst first-quarter finish of its 135-year history. The Standard & Poor’s 500 index also neared historic lows.

The virus has killed thousands across the globe, including in the United States. The national lockdown imposed to contain the virus has sent the American economy into a self-induced seizure and stocks into a steep decline.

The end of a historic bull run came swiftly to investors riding high from a 30-percent stock gain in 2019. The Dow was within a wisp of the 30,000 threshold just weeks ago.


Many thought that the bull market was on shaky ground from trillion-dollar federal deficits, wild stock valuations, and years of ultralow interest rates. “We were at significant risk to any catalyst given the froth that was in the market,’’ said Liz Ann Sonders, chief investment strategist at Charles Schwab. ‘‘We were at risk for at least a pullback with even a mild catalyst because sentiment was at an extreme. What we got was the ultimate negative catalyst.’’

Analyst warned earlier in the week that volatility could dominate the final days of the first quarter and first weeks of the second. And with wild swings on Tuesday, the markets proved those predictions correct, a marker of how confounded investors appear as the covid-19 economic crisis takes a fuller form.

Traders earlier Tuesday were buoyed in the short term by better-than-expected readings on a wounded economy. Consumer confidence fell from 132.6 to 120 when experts expected a steeper decline. Goldman Sachs revised expectations for the rest of the fiscal year, predicting as much as 15 percent unemployment due to the novel coronavirus outbreak, but also a rapid economic rebound.


‘‘Near-term volatility was lower in recent days, but longer-dated volatility has remained relatively stable,’’ said Lauren Goodwin, an economist and multi-asset portfolio strategist at New York Life Investments. ‘‘To us, this means [Monday’s] equity rally is a part of short-term optimism, not the end of market volatility. Investors are buying into the market, but they are more cautious with respect to longer-term opportunities.’’

Then harsh realities set in. Oil, which seemed poised for a day in the green, surrendered its 7-percent bump amid realizations that, while it could have been worse, consumer confidence and demand are still lifeless. Brent Crude was down one-tenth of a percent. New York Governor Andrew Cuomo reported that coronavirus cases in the Empire State increased by 14 percent overnight, and more layoffs rolled in.

Economists predicted the number of jobless claims nationwide could rise from a record 3.3 million when new figures are published Friday. Some projections forecast that by mid-April 40 million Americans could be out of work, which could leave many struggling to make rent and mortgage payments.

Macy’s on Monday announced it will furlough most of its 125,000 workers after sales flatlined, while Kohl’s, Gap, and Sysco Corp. confirmed tens of thousands of furloughs and layoffs. On Tuesday, Simon Property Group, the nation’s largest mall owner, furloughed 30 percent of its workforce.

‘‘The consumer confidence index is likely to continue to fall as the hit to the economy is going to be even harder than it was in the Great Recession over a decade ago,’’ Chris Rupkey, managing director and chief financial economist for MUFG. ‘‘We are starting to lose confidence ourselves that the economy can be restarted as easily as government officials are saying as the expected length of the coronavirus shutdown grows ever longer.”


Overseas markets gained after better-than-expected news on output from Chinese manufacturers. The German DAX was up one-third of a percent and London’s FTSE grew three-quarters of a percent. The HSI out of Hong Kong grabbed 428 points, or nearly 2 percent, and Japan’s Nikkei lost 0.9 percent. Indian investors finally saw some relief; the BSE Sensex in Mumbai grew more than 1,000 points, or 3.6 percent.