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Indexes fall: Dow 0.84%, S&P 500 1.57%, Nasdaq 2.15%

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Major health insurers rise after Medicare payment rate

boost

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Big bank earnings set to begin later this week

(Updates with final prices, volume data)

By Sinéad Carew and Shashwat Chauhan

April 8 (Reuters) - The S&P 500 sold off sharply on

Tuesday to close below 5,000 points for the first time in almost

a year after it reversed a strong morning rally, while investor

hopes faded for any imminent U.S. delays or concessions on

tariffs ahead of a midnight deadline.

The benchmark index, which fell 1.6% on Tuesday, has lost

$5.8 trillion in market value since President Donald Trump

unveiled hefty global tariffs against U.S. trading partners late

on Wednesday. This represented more than 12% for its biggest

four-day percentage decline since the pandemic, according to

LSEG data.

The S&P had risen more than 4% earlier on Tuesday as

investors had hoped that Trump would soften his stance or

postpone an April 9 deadline for tariffs.

But White House press secretary Karoline Leavitt said on

Tuesday afternoon that Trump expects tariffs will go into effect

even though she said nearly 70 countries reached out looking to

begin negotiations to reduce the impact of U.S. trade policies.

Market participants "were optimistic this morning that we

would get some sort of sign that we're moving closer to a deal

or a compromise with some of these bigger countries or that

there would be a delay coming given that so many people wanted

to negotiate," said Lindsey Bell, chief market strategist at

Clearnomics in New York.

"That doesn't seem to necessarily be the case as we are

quickly approaching the midnight deadline and investors are

losing confidence."

The White House said on Tuesday afternoon that it expects

104% tariffs on China to go into effect on April 9.

This was after China had said earlier it will never accept

the "blackmail nature" of Trump's threat to ratchet up tariffs

on Chinese imports to more than 100%.

And United States Trade Representative Jamieson Greer said

on Tuesday that exemptions to the global tariffs are not

expected in the near term.

"People wanted to be optimistic and eventually realized they

didn't have a good reason," Melissa Brown, Managing Director,

Investment Decision Research at SimCorp.

"Earnings are going to start to be reported in the next few

days. Even if earnings in the first quarter aren't down badly

we're going to see a lot of language from companies about the

expected impact from the tariffs."

Quarterly earnings season will kick off later this week,

with JPMorgan, Morgan Stanley ( MS ) and Wells Fargo ( WFC ) set

to report on Friday.

The S&P 500 edged nearer to confirmation of a bear

market, finishing almost 19% below its record close on Feb. 19.

A bear would be 20% below.

The benchmark lost 79.48 points, or 1.57%, to close at

4,982.77 on Tuesday. The last time it closed below 5,000 was

April 19 last year.

The Dow Jones Industrial Average fell 320.01 points,

or 0.84%, to close at 37,645.59, while the Nasdaq Composite

lost 335.35 points, or 2.15%, to end at 15,267.91.

After falling as low as 36.48 points earlier in the day, the

CBOE Volatility Index - seen as Wall Street's 'fear

gauge' - gathered steam again to close at 52.33 points, which

was its highest closing level since March 2020 in its fourth

straight day of advances.

Worries that the aggressive U.S. tariffs could spur inflation

and hamper global growth have led to some to believe Federal

Reserve interest-rate cuts could follow.

But San Francisco Federal Reserve Bank President Mary Daly

said on Tuesday afternoon that with the economy strong and a lot

still unclear on the effect of new policies of the Trump

administration, the central bank should not rush to adjust

interest rates.

In individual stocks, health insurer UnitedHealth Group ( UNH )

climbed 5.4% and Humana jumped 10.7% after the

U.S. announced a 5.06% increase in payment rates to private

insurers for 2026 Medicare Advantage health plans.

Declining issues outnumbered advancers by a 3.03-to-1 ratio

on the NYSE where there were 17 new highs and 1132 new lows.

On the Nasdaq, 1,002 stocks rose and 3,492 fell as declining

issues outnumbered advancers by a 3.49-to-1 ratio.

The S&P 500 posted no new 52-week highs and 109 new lows

while the Nasdaq Composite recorded 17 new highs and 568 new

lows.

On U.S. exchanges 23.45 billion shares changed hands, well

above the 17.35 billion average for the last 20 sessions, but

below Monday's record 29.45 billion trades.