S&P 500 set for worst first quarter since 1938

(Reuters) – Wall Street’s slide deepened on Tuesday, with the S&P 500 was set for its worst first quarter since 1938 on growing evidence of a largescale corporate damage from the coronavirus pandemic as well as a near collapse in oil prices.

The benchmark index was tracking its biggest quarterly decline since the 2008 financial crisis, losing more than $5 trillion in market value, as the health crisis worsened in the United States and brought business activity to a standstill.

Real estate stocks .SPLRCR, utilities .SPLRCU and consumer staples .SPLRCS were among the biggest decliners following a recent rally sparked by bargain hunters looking for stocks likely to weather an economic slump.

“The market is in the process of bottoming out, but this will probably be just a lot of back and forth as the market tries to consolidate around one price level,” said Shawn Cruz, manager of trader strategy at TD Ameritrade in Jersey City, New Jersey.

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

With economists slashing 2020 growth expectations, investors fear corporate defaults and more mass layoffs would lead to a deep and lasting global recession.

“Because the outbreak triggered the economic downturn and the swoon in stock prices, a sustained improvement in the outlook is dependent on the containment of the health crisis,” said Mark Hamrick, economic analyst at Bankrate.com in Washington, DC.

At 1:34 p.m. ET the Dow Jones Industrial Average .DJI was down 228.82 points, or 1.02%, at 22,098.66, the S&P 500 .SPX was down 28.67 points, or 1.09%, at 2,597.98 and the Nasdaq Composite .IXIC was down 39.13 points, or 0.50%, at 7,735.03.

In one of the fastest turns into a bear market, the Dow Jones and S&P 500 indexes are now set to end the quarter more than 18% below their levels at the start of the year.

The blue-chip Dow is on course for its biggest quarterly percentage decline since 1987, while the tech-heavy Nasdaq is set for its worst three months since 2018.

Technology stocks .SPLRCT, which have posted the smallest declines among the major S&P 500 sectors this quarter, bounced between gains and losses, partly as traders rebalanced their portfolios at the end of the quarter.

The energy index .SPNY rose nearly 2%, boosted by a rebound in prices from 18-year lows after the United States and Russia agreed to discuss stabilizing energy markets. [O/R]

The sector has lost about half its value this year from the double whammy of the coronavirus and the Russia-Saudi Arabia price war, forcing refiners to cut production and join a slate of U.S. firms looking to raise cash as liquidity evaporated.

Declining issues nearly matched advancers on the NYSE and on the Nasdaq.

The S&P index recorded one new 52-week high and no new low, while the Nasdaq recorded 10 new highs and 29 new lows.