S&P 500 set for worst first quarter since 1938

(Reuters) – Wall Street steadied on Tuesday as investors returned to stocks that are likely to weather an economic slump due to the coronavirus pandemic that has put the S&P 500 on course for its worst first quarter since 1938.

Technology firms .SPLRCT, which have been resilient amid a broader selloff that has erased more than $5 trillion from the value of S&P 500 firms, were the biggest boost to the index.

Real estate stocks .SPLRCR, utilities .SPLRCU and consumer staples .SPLRCS, on the other hand, led declines following a recent rally, partly as traders rebalanced their portfolios at the end of the quarter.

“Stocks have been on a wild ride … (and) not surprisingly, investors are split on whether to lean in to or fade the current rally,” said Jonathan Golub, chief U.S. equity strategist at Credit Suisse Securities in New York.

An unprecedented round of fiscal and monetary stimulus had helped equity markets stabilize last week following wild swings in the past month that saw the benchmark S&P 500 rise 9{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} and slump 12{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in two consecutive sessions.

Wall Street’s volatility index has retreated from 12-year highs but is still at levels rarely seen since the global financial crisis.

Sliding from the record highs of mid February, the Dow Jones and S&P 500 indexes are now set to end the quarter more than 18{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} lower from the start of the year.

The blue-chip Dow is on course for its biggest quarterly percentage decline since 1987, while the tech-heavy Nasdaq is set for its worst three months since 2018.

On Tuesday, Facebook Inc (FB.O), Amazon.com Inc (AMZN.O), Apple (AAPL.O), Netflix Inc (NFLX.O) and Google-parent Alphabet Inc (GOOGL.O) – known as the FAANG group of stocks – rose 1{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} to 2.6{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}, helping the Nasdaq outperform broader gains.

“You’re still watching Netflix, you’re still ordering your stuff from Amazon … the usage is so ingrained for some of these names even with this backdrop (that) it’s not surprising that tech has held up as well as it has,” said Jack Janasiewicz, portfolio manager at Natixis Investment Managers Solutions.

Data on Tuesday showed that U.S. consumer confidence dropped less-than-expected in March, but investors have so far ignored macroeconomic data as they brace for corporate defaults and more mass layoffs in the second quarter.

A surprise expansion in China’s March factory activity injected optimism about a potential recovery for U.S. businesses once sweeping stay-at-home orders are lifted and the economy comes back online.

At 11:18 a.m. ET the Dow Jones Industrial Average .DJI was up 68.97 points, or 0.31{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}, at 22,396.45, the S&P 500 .SPX was up 5.59 points, or 0.21{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}, at 2,632.24 and the Nasdaq Composite .IXIC was up 70.32 points, or 0.90{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}, at 7,844.47.

The energy index .SPNY jumped 4{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}, boosted by a rebound in prices from 18-year lows after the United States and Russia agreed to discuss stabilizing energy markets. [O/R]

Advancing issues outnumbered decliners by a 1.42-to-1 ratio on the NYSE and a 1.58-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week high and no new low, while the Nasdaq recorded eight new highs and 16 new lows.