Wall Street hits brakes on rally; Dow plunges more than 350 points

Dow Jones industrial average slid more than 350 points, or 1.3 percent, at the opening bell. The Standard & Poor’s 500 index dropped 1.1 percent while the Nasdaq Composite lost nearly 0.6 percent.

The retreat follows a six-day rally that pushed the S&P 500 index back into positive territory for the year and propelled the tech-heavy Nasdaq to a record high. U.S. stocks are on pace to post three straight months of gains on renewed optimism that the country is pushing out from its coronavirus stranglehold.

“The positive impact from the [European Central Bank] meeting and Friday’s U.S. jobs report has waned, with no fresh bullish news to take their place,” Chris Beauchamp, IG’s chief market analyst, said Tuesday in comments emailed to The Post. “But such volatility has been seen several times before over the past three months, and such sharp reversals have merely been ‘resets’ of bullish price action, clearing the decks for another move higher as money continues to flow into equities.”

European markets were negative across the board Tuesday in midday trading, with the benchmark Stoxx 600 down 1.3 percent. Germany’s DAX declined more than 1.6 percent after a report that the trade-centric country’s exports had plunged 24 percent in April, its steepest monthly decline since it began publicly tracking data in 1990.

Global markets have soared in the past week amid a wave of unprecedented government stimulus to combat the economic consequences tied to the pandemic. Many sectors have broken out from their coronavirus coma. Stocks for airlines, cruise lines, oil companies, hotels, casinos and restaurants have all popped in the belief that people will resume their pre-covid lives sooner rather than later.

But recent projections suggest the breadth of economic damage will require a long road to recovery: On Monday, the World Bank published a report that said the pandemic had created the worst global recession since World War II. It estimates that global gross domestic product will shrink 5.2 percent in 2020 as the pandemic continues to disrupt business, travel and manufacturing.

“Monetary and fiscal policy have been enormously effective in convincing investors that ‘worst case scenarios’ are off the table, but a slow and uneven recovery could have a long-lasting impact,” Lauren Goodwin, economist and Multi-Asset Portfolio Strategist at New York Life Investments wrote in commentary Monday.

The National Bureau of Economic Research declared on Monday that the U.S. entered its first recession in nearly 11 years in February, ending a historic 128-month expansion as the coronavirus swept the country and put the economy into a tailspin.

Investors are waiting to hear Wednesday from the Federal Reserve, which will issue an updated policy statement and its first economic projections of 2020. On Monday, the central bank expanded its Main Street lending program to make financial support available to a wider variety of small and medium-sized businesses.

Oil markets also trended negative Tuesday, with Brent crude, the international oil benchmark, declining .9 percent to trade at $40.44 a barrel. Over the weekend, OPEC and its allies agreed to another round of historic production cuts to guard against a global oil glut while the world edges toward post-pandemic normalcy.