Tuesday March 31st


Stock futures fall as the Dow heads for its worst first quarter ever

U.S. stock index futures dropped in choppy trading early Tuesday morning, as the market tries to make back some of the deep losses triggered by the coronavirus pandemic. At 8:37 a.m. ET, futures on the Dow Jones Industrial Average were 170 points lower, or 0.8%. S&P 500 futures traded 0.8% lower while Nasdaq-100 futures slid 0.6%. The Dow jumped nearly 700 points on Monday led by an 8% pop in Johnson & Johnson after it announced a vaccine candidate for the coronavirus. The S&P 500 rallied 3.4%. Investors embraced a more realistic government approach to contain the pandemic. President Donald Trump extended the timeline for social distancing guidelines to April 30, which many believe will reduce economic damage in the long run.  “I think the market has established some type of bottom,” Tom Lee, head of research at Fundstrat Global Advisors, said on CNBC’s Markets in Turmoil Special on Monday. “I don’t know if this is October ’08 here; we still have some wood to chop.” Stocks have managed to rally to end the month despite concerning economic data including last week’s record number of jobless claims and Monday’s worse-than-expected manufacturing reading from the Dallas Fed, Lee noted. “If we are rallying on bad news, I think that’s a sign that we are probably at a bottom,” Lee said. The Dow is now up 20% from its coronavirus sell-off low reached on March 23 while the S&P 500 has risen more than 17% from those levels. Despite the recent comeback, the market is on pace to end the month and quarter with big losses: The Dow is down 12% in March, on pace for its worst month since October 2008. The S&P 500 is down 11% in March, also on pace for its worst month since 2008. The Dow is down 21.8% this quarter, on track for its worst quarter since 1987 and its worst first quarter ever. The S&P 500 is off 18.7% this quarter, on track for its worst quarter since 2008 and its worst first quarter since 1938. Many on Wall Street are calling for  even more selling before the market can hit a bottom. Historically, Bear markets are often punctuated by sharp bounces on their way down to a trough. “Last week’s double-digit gain for markets was a welcome relief rally, though market bottoms are rarely as clean as this one has been,” said Mark Hackett, Nationwide’s chief of investment research. “Markets will need to reflect more traditional interactions before confidence in a bottom can be reached.” Investors continued to grapple with the worsening outbreak in the U.S. as the confirmed cases rose to more than 153,200, according to data from Johns Hopkins University. The U.S. has also officially become the country most affected. Trump said Sunday he hopes the country will “be well on our way to recovery” by June 1. “We anticipate that market volatility will resist until liquidity, credit, and health risks have demonstrably passed,” said Lauren Goodwin, economist and portfolio strategist at New York Life  Investments. “With major policy stimulus now in place in the U.S., we expect grim health and social news to dominate the next couple of weeks.” Stocks in Asia Pacific were mixed on Tuesday as China’s official manufacturing Purchasing Managers’ Index for March came in better than some analysts expected. Mainland Chinese stocks edged higher on the day, with the Shanghai composite up 0.11% to about 2,750.30 while the Shenzhen composite added 0.505% to approximately 1,665.93. The Shenzhen component rose 0.58% to 9,962.30. Hong Kong’s Hang Seng index also closed 1.85% higher at 23,603.48. In South Korea, stocks led gains among the region’s major markets. The Kospi rose 2.19% on the day to 1,754.64 while the Kosdaq index gained 4.97% to close at 569.07. Japan’s Nikkei 225 also closed lower as it dipped 0.88% to 18,917.01 while the Topix index fell 2.26% to end its trading day at 1,403.04. Oil prices firmed on Tuesday after U.S. President Donald Trump and Russian President Vladimir Putin agreed to talks aimed at stabilizing energy markets, with benchmarks climbing off 18-year lows hit as the coronavirus outbreak cut fuel demand worldwide. Brent crude was up by 84 cents, or 3.7%, at $23.60 a barrel, after closing on Monday at $22.76, its lowest finish since November 2002. U.S. crude was up by $1.56, or 7.8%, at $21.66 a barrel, after settling in the previous session at $20.09, its lowest since February 2002. Gold dropped as much as 2.4% on Tuesday as the dollar strengthened and strong Chinese economic data boosted risk appetite, but bullion was heading for a sixth straight quarterly rise amid fears over a global shutdown due to the coronavirus. Spot gold was down 1.4% at $1,599.90 per ounce. It has gained more than 5% for the quarter, and about 1% this month. U.S. gold futures fell 1.8% to $1,613.90.