By Stan Choe, Damian J. Troise, and Alex Veiga

Stocks are down in subdued trading Tuesday, as Wall Street's wraps up its worst quarter of performance since the 2008 financial crisis.

The S&P 500 is down in afternoon trading after flipping between modest losses and gains, pushing its loss for the first three months of the year to 20.2%. Trading was similarly shaky elsewhere earlier in the day: Global markets initially rose following a stronger-than-expected report on China’s economy, but momentum briefly stalled after the number of deaths caused by the coronavirus outbreak jumped in Spain. Major European indexes shook off the early slide and were headed higher.

The surge of coronavirus cases around the world has sent markets to breathtaking drops since mid-February, undercutting what had been a good start to the year. Markets rose early in the quarter, and the S&P 500 set a record with expectations that the economy was accelerating due to calming trade wars and low interest rates around the world.

Benchmark U.S. crude oil has dropped by roughly two thirds this quarter and hit its lowest price since 2002 on Monday on expectations of a dramatic drop in demand. The price turned a bit higher Tuesday. Germany’s DAX has lost a quarter of its value since the start of the year, and South Korean stocks dropped just over 20%.

The big question is if markets will get worse. At this point, no one knows.

"It's a pretty quiet day," said George Rusnak, managing director of investment strategy at Wells Fargo Private Bank. “People are trying to digest the length and magnitude of what the coronavirus impact is going to be.”

The reason for the huge declines in stock markets from Tokyo to Toronto is that economies around the world are grinding to near standstills as businesses close their doors and people hunker down at home in hopes of slowing the spread of the virus. A record number of Americans applied for jobless benefits two weeks ago as layoffs sweep the country. The expectation is that markets will remain incredibly volatile until the number of new infections stops accelerating and investors can get some idea of just how bad the upcoming economic downturn will be.

The hope is that massive aid coming from the Federal Reserve and Capitol Hill can help prop up the economy in the meantime.

The Fed has promised to buy as many Treasurys as it takes to get lending markets working smoothly after trading got snarled in markets that help companies borrow short-term cash to make payroll, homebuyers get mortgages and local governments to build infrastructure. Congress, meanwhile, approved a $2.2 trillion rescue plan for the economy Those actions have helped markets become less dysfunctional, investors say and led stocks to their recent rally. The S&P 500 has jumped more than 17% since last Monday.

“We’re kind of on this little milestone journey with markets,” said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Co. “First, we get the economic plan in place, then we have to start to see some of the containment actions pay off. At some point, it’s going to be how do we get back to work.”

Among the next milestones for investors is Friday's jobs report, which is expected to show a sharp drop in payrolls. Companies will also begin reporting their earnings results for the first quarter in upcoming weeks, and analysts are looking for the steepest drop in profits since the start of 2016, according to FactSet.

The numbers may get even worse in the following quarter.

Goldman Sachs economists said Tuesday they expect the U.S. economy to shrink 34% in the second quarter, but they expect growth to rebound in the third quarter.

The S&P 500 was down 1.8%, as of 3:21 p.m. Eastern time. The Dow Jones Industrial Average fell 388 points, or 1.7%, to 21,938, and the Nasdaq was off 1.4%.

The relatively modest moves are a big departure from earlier in the month when huge swings punished investors. The S&P 500 had its worst day since Black Monday 1987 on March 12 with a 9.5% loss, for example, only to outdo itself with a 12% drop two days later. Sandwiched in between was a 9.3% surge.

The number of known coronavirus cases keeps rising, and the worldwide tally has topped 780,000, according to Johns Hopkins University. The United States has the highest number in the world, more than 160,000.

Most people who contract COVID-19 have mild or moderate symptoms, which can include fever and cough. But for others, especially older adults and people with existing health problems, the virus can cause pneumonia and require hospitalization. More than 37,000 have died worldwide due to COVID-19, while more than 160,000 have recovered.

“We're still not even close to peak coronavirus in the U.S. which has already reported more cases than any other country and will sadly likely see a huge spike in the number of deaths, meaning further lockdown measures will likely follow,” said Craig Erlam, senior market analyst at OANDA Europe. “Huge challenges still lie ahead.”


AP Business Writer Pan Pylas contributed from London.

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