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The Dow just had the worst 1st quarter in 124 years. The S&P 500 has not been down in these three successive months since 2008. What does history tells about the stock market from here?

Wall Street Floor 1929

The coronavirus inspired route has benn fast and brutal. It is the worse quarter for the 124-year-old Dow Jones Industrial Average since the fourth quarter of 1987. The three-month collapse was the steepest first-quarter drop, from January through the end of March, in the index’s history, according to Dow Jones Market Data.

The table below shows how all 30 components performed from January through March.

With April 1at performance continuing the slide

Dow 30 Q1 2020

On Tuesday, the Dow Jones Industrial Average DJIA, -4.44% fell 410 points (or 1.8%) to close at 21,917.16.putting it down 23.2% for the first quarter, the biggest decline since the fourth quarter of 1987, when Black Monday (Oct. 19) occurred.

The only Dow stock that rose during the first quarter was Microsoft MSFT,  which closed at $157.71 on March 31, up a penny from $157.70 on Dec. 31. Note that all performance figures in this article exclude dividends.

The S&P 500 Index SPX, dropped 1.6% on Tuesday for a first-quarter decline of 20%.

The Nasdaq Composite Index COMP, fell 1% on Tuesday for a first-quarter decline of 14.2%.

All 11 sectors of the S&P 500 were down significantly during the first quarter:

Index Quarterly % change Best/worst since

Dow -23.2% Q4 1987

S&P 500 -20% Q4 2008

Nasdaq Composite Index -14.18% Q4 2018

Source: Dow Jones Market Data

The first time isince 2008 that the S&P benchmark has ended each of the first three months of a calendar year in negative territory, as it did in January, off 0.2%; February, falling 8.41%; and March, where it’s on pace to suffer a loss of at least 13.74%.

A S&P 500  January-to-March stretch of losses has only occurred seven other times in the history of the 63-year-old stock index.

The Nasdaq Composite Index COMP, has declined more than 14%, which represents the worst quarterly decline since the last three months of 2018 

All that said, the prospects over the longer term after such declines leaves cause for hope. After the Dow has produced a quarter as ugly as this one, the blue-chip index returns 11.88% and 8.49% in the following two quarters, according to Dow Jones Market Data.In such a year, the Dow returns 22.75% on average.

There are similar positive trends for the other two main benchmarks.

Here’s how the Dow performs after a quarter as bad as this one

Dow after bad Q1

  • Quarter % change 2-quarter period % change 1-year out % change
  • Dow 11.88% 8.49% 22.75%
  • S&P 500 12% 15.38% 27.79%
  • Nasdaq 3.79% 5.57% 9.54%

Here’s how the indexes fare after a month as bad as the one in March, on average, with the Dow down 12.5% in March so far, the S&P 500 off more than 11% and the Nasdaq down 9.5%, representing the worst monthly drops for the benchmarks since 2008:

  • 1-month 2-month 1-year
  • DJIA 0.05% 1.77% 5.69%
  • S&P 500 -0.15% 2.14% 8.72%
  • Nasdaq -0.47% 2.53% 8.35%

SOurce: Dow Jones

From The TradersCommunity Research Desk

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