NEW YORK — The stock market closed out a painful second quarter Wednesday and left investors with heavy losses and far more doubts about the economy than they had just months ago.
Stocks had their worst quarterly performance since the financial crisis began. The Standard & Poor’s 500 index, considered by many professional investors to be the best measure of the market’s health, lost 11.9 percent, while the Dow Jones industrial average lost 10 percent. Both indexes are at their lows for 2010.
Meanwhile, Treasury notes and bonds soared during the quarter, driving interest rates sharply lower, as investors turning away from stocks sought a place where their money would be safe. In the early days of the quarter, the yield on the Treasury’s 10-year note, used as a base for setting rates on consumer loans including mortgages, was close to 4 percent. By the quarter’s end, it had fallen to less than 3 percent.
On the last day of the April-June period, the Dow lost 96 points, and all the big indexes were down about 1 percent.
Using the S&P 500 as a benchmark, stocks had their worst quarterly loss since the fourth quarter of 2008, when the index plunged 22.6 percent. For the first half, the index is down 7.8 percent, its worst first-half showing since the 13.8 percent it lost at the start of 2002.
When dividends are included, the S&P 500 lost 11.43 percent during the quarter. The market lost about $1.6 trillion in value during the quarter, as measured by the Dow Jones U.S. Total Stock Market Index, which tracks nearly all U.S.-based companies.
Economist Joel Naroff of Naroff Economic Advisors said investors are disappointed the economy is not growing as strongly as they had anticipated earlier this year amid talk of a so-called V-shaped recovery, in which the economy rebounds sharply after a big drop.
But he thinks investors have sold too much.
“They’re thinking, ‘Gee, if we’re not getting a V-shaped recovery, we’ll get a double dip.’ They’ve gone from euphoria to depression,” Naroff said. “The reality is somewhere in between.”
The quarter’s final day saw a last-hour sell-off that has become standard, especially when a big economic number such as the government’s June employment report due out Friday is imminent.
Karl Mills, chief investment officer at money manager Jurika, Mills & Kiefer, pointed to a lack of buyers in the market that forced sellers to keep lowering their prices to get someone to buy.
“No one wants to be a hero. Everyone is looking to employment numbers coming out Friday,” he said.
The Dow fell 96.28, or 1 percent, to 9,774.02. The S&P 500 fell 10.53, or 1 percent, to 1,030.71, while the Nasdaq composite fell 25.94, or 1.2 percent, to 2,109.24.
“Investors anticipate what’s going to happen (in a recovery), and sometimes they overanticipate,” said Sam Stovall, chief investment strategist of U.S. equity research at S&P. After a couple of quarters pass, investors go through a “reality readjustment.”
