MANHATTAN (CN) — The first quarter of 2020 was the worst on record for the Dow Jones Industrial Average, which has lost 6,700 points since the beginning of the year.
By Tuesday’s closing bell, the Dow fell about 400 points, or 1.8%, with the S&P 500 and Nasdaq suffering similar albeit smaller losses.
While European markets closed on an increase Tuesday — the pan-European Stoxx 600 gained 1.65% — they also suffered their worst opening quarter since 2002.
“Another brutal quarter for the market. These numbers are unprecedented,” said Peter Ricchiuti, a senior professor at Tulane University. “Even in ’87 I didn’t see it drop that fast.”
Markets have also seen nearly unprecedented volatility, peaking at nearly 85 points earlier this month. “That number is huge, historically,” Michael Pagano, a finance professor at Villanova University, said in an interview.
Pagano pointed to another spike in the index, known as the VIX and colloquially referred to as the “fear index.” In March 2009, the VIX jumped erratically before settling, which kicked off the longest bull run in U.S. history. “That kind of put a floor on things, and the rest was history,” Pagano said.
Ricchiuti distinguished the current downturn from ones the country experienced in 2008 or 1987.
“When you look at ’87, nobody knew when it was going to come back, but this time you really do see a light at the end of the tunnel,” he said. He added that if markets can take bad news without moving too far down, that indicates a bottom of a bear market is near.
Lawmakers and central banks worldwide are still scrambling to mute the economic fallout from any further bad news.
The Federal Reserve took additional steps on Tuesday to maintain liquidity as the markets await what is likely to be worse unemployment numbers later this week.
Starting April 6, the Fed will lend dollars to other central banks in exchange for Treasury securities.
“This facility should help support the smooth functioning of the U.S. Treasury market by providing an alternative temporary source of U.S. dollars other than sales of securities in the open market,” the Fed said in a statement.
The Fed, which Chairman Jerome Powell claims “has not run out of ammunition” to deal with the economic downturn, already has announced a historic open-ended lending program, lowered its interest rate to nearly zero, and agreed to purchase more than $1 trillion in Treasuries and mortgage-backed debt.
Talk of a fourth stimulus bill has already begun, mere days after President Trump signed the $2.2 trillion package.
House Speaker Nancy Pelosi said Monday that Democrats were working on another bill aimed at hospitals and health care workers on the front lines, as well as funding for such infrastructure as water systems, broadband and the energy grid.
“Our first bills were about addressing the emergency. The third bill was about mitigation,” Pelosi told reporters. “The fourth bill would be about recovery.”
President Trump seemed to echo his support for a focus on infrastructure. “With the interest rates for the United States being at ZERO, this is the time to do our decades long awaited Infrastructure Bill,” Trump tweeted Tuesday morning. “It should be VERY BIG & BOLD, Two Trillion Dollars, and be focused solely on jobs and rebuilding the once great infrastructure of our Country!”
Lawmakers are on recess until April 20.
So far, about 174,000 in the United States have been infected by the virus, while 3,400 have died, according to data compiled by Johns Hopkins University. Those numbers are likely to increase as testing becomes more widespread, and the administration’s leading infectious-disease experts have suggested as many as 200,000 Americans could die from Covid-19.
Cases of Covid-19, the new strain of coronavirus, have more than doubled in the last week. The virus has affected at least 826,000 and killed more than 40,000 worldwide.
Several countries in Europe reported alarming numbers of deaths for the virus Tuesday.
On Monday Spain set a worldwide daily record for coronavirus-related deaths, suffering 849, even as new cases reportedly have started to slow. In France, 418 people died from coronavirus Monday, its highest single-day record.
Despite a glimmer of hope due to a two-day decline in its death rate, Italy recorded 812 lives lost Monday, adding to its world-leading 11,000 deaths.