Wall Street just had one of its worst quarters in history

Lucy Bayly

Wall Street just ended one of the worst quarters in stock market history, with all three major averages reflecting the devastating economic impact of the pandemic that has ground global activity almost to a halt.

The Dow Jones Industrial Average was down by just over 400 points by the closing bell Tuesday, a quarterly loss of 22 percent for the blue-chip index and its worst first-quarter performance ever.

The S&P 500, which ended the day lower by around 1.85 percent, recorded its worst first quarter since 1938, while the tech-heavy Nasdaq closed down by just under 1 percent.

The quarterly losses come despite a series of emergency actions by the Federal Reserve to bolster the economy and backstop credit flow for businesses and individuals, as well as a $2 trillion fiscal stimulus package meant to prop up small businesses and support big corporations in the fight against the large-scale damage inflicted by the outbreak.

Investor sentiment was further dampened Tuesday by newly released consumer confidence data that reflected the nosedive in spending, but economists said the worst is yet to come.

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"The consumer confidence survey was just before we got the really massive layoffs," said Dan North, chief economist for North America at the credit insurance company Euler Hermes. "Next month, it's going to plummet."

Traders remain nervous about coming economic data, including this week's jobless claims, after last week's figures showed that a staggering 3.28 million Americans had filed for unemployment, the most on record. Friday's monthly jobs report from the Bureau of Labor Statistics is also expected to disappoint, even though the data were collected before the heaviest impact from the viral outbreak began.

Adding to investors' woes is the collapse in oil prices brought on by the biggest plunge in demand in history, with flights slashed and lockdowns implemented in the majority of states. A price war between mega-producers Saudi Arabia and Russia pushed the price of a barrel of crude oil down to a level not seen since the first Persian Gulf War, in 1991. Oil was trading at just under $20 on Tuesday, closing out the quarter with its worst percentage decline in history, as crude inventory piles up.

President Donald Trump announced Sunday that he will extend his administration's guidelines on social distancing until April 30, and markets responded positively. The U.S. is now the center of the coronavirus pandemic, with the number of cases officially higher than in China, where the outbreak originated.

Trump said he expects "great things to be happening" by June 1, saying he hoped to keep the number of deaths below 100,000.

"So if we can hold that down, as we're saying, to 100,000, it's a horrible number, maybe even less, but to 100,000, so we have between 100 and 200,000, we all together have done a very good job," Trump said Sunday at a coronavirus task force briefing.

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Economists fundamentally agree that the trajectory of the virus will determine the recovery time for the U.S. economy. A member of Trump's task force, Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said Monday that the virus could have a second wave in the fall.

Further lockdowns and an extended period of social distancing are bound to lead to increased unemployment, as well as further — and possibly permanent — damage to face-to-face industries such as bars, restaurants, travel and the retail sector.

While millions of Americans already have lost their jobs because of the crisis, the unemployment rate could ultimately hit 32 percent, according to one Federal Reserve estimate. That would top the Great Depression peak of 24.9 percent.