Stocks recovered from initial weakness but moved back to the downside over the course of the trading session on Tuesday. With the drop on the day, the Dow and the S&P 500 had their worst first quarter performances ever, plunging by 23.2 percent and 20 percent, respectively.
The major averages all finished the session firmly in negative territory. The Dow plunged 410.32 points or 1.8 percent to 21,917.16, the Nasdaq slumped 74.05 points or 1 percent to 7,700.10 and the S&P 500 tumbled 42.06 points or 1.6 percent to 2,584.59.
The afternoon pullback on Wall Street may have reflected lingering concerns about the economic impact of the coronavirus pandemic, as New York Governor Andrew Cuomo said confirmed cases in his state jumped to more than 75,000 overnight.
Earlier in the day, traders reacted positively to separate reports on consumer confidence and Chicago-area business activity, which showed deteriorations in March but still came in well above economist estimates.
A report from the Conference Board showed its consumer confidence index slumped to 120.0 in March from an upwardly revised 132.6 in February.
However, economists had expected the consumer confidence index to tumble to 110.0 from the 130.7 originally reported for the previous month.
MNI Indicators released a separate report showing its Chicago business barometer fell to 47.8 in March from 49.0 in February, with a reading below 50 indicating a contraction in regional business activity.
The Chicago business barometer remained below 50 for the ninth straight month but showed a relatively modest decrease compared to economist estimates for a slump to 40.0.
The better than expected data offset some of the concerns about the economic impact of the ongoing coronavirus pandemic.
A report showing an unexpected expansion in Chinese manufacturing activity in the month of March also helped to alleviate the worries.
The latest survey from the National Bureau of Statistics showed China’s purchasing managers index jumped to 52.0 in March from 35.7 in February, with a reading above 50 indicting an expansion.
Economists had expected the index to climb to 45.0, although a reading below 50 would have indicated a continued contraction in Chinese manufacturing activity.
Positive sentiment was also generated in reaction to Dr. Anthony Fauci telling CNN he is starting to see “glimmers” that social distancing is helping to stop the spread of the coronavirus in the U.S.
Interest-rate sensitive stocks turned in some of the market’s worst performances on the day, with utilities stocks showing a substantial move to the downside.
Reflecting the weakness in the sector, the Dow Jones Utility Average tumbled by 3.7 percent after moving sharply higher over the five previous sessions.
Banking, housing, and commercial real estate stocks also saw considerable weakness as treasury yields moved higher after trending lower in recent days.
Gold stocks also showed a significant move to the downside, as the price of gold for June delivery plunged $46.60 to $1,596.60 an ounce.
Semiconductor, chemical and networking stocks also came under pressure, while notable strength remained visible among energy stocks as the price of crude oil bounced off its lowest closing level in eighteen years.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index slid by 0.9 percent, while Hong Kong’s Hang Seng Index surged up by 1.9 percent.
Meanwhile, the major European markets all finished a volatile session in positive territory. While the French CAC 40 Index rose by 0.4 percent, the German DAX Index jumped by 1.2 percent and the U.K.’s FTSE 100 Index spiked by 2 percent.
In the bond market, treasuries gave back ground after moving notably higher over the past few sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.8 basis points to 0.698 percent.
Reports on private sector employment and manufacturing activity may attract attention on Wednesday, as traders attempt to gauge the early economic impact of the coronavirus pandemic.
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