(Updates prices at U.S. close)

By Sinéad Carew and Shashwat Chauhan

April 8 (Reuters) -

The S&P 500 closed down below 5,000 for the first time in

almost a year following Tuesday's volatile session and a strong

morning rally as investor hopes faded for any imminent U.S.

delays or concessions on tariffs ahead of a midnight deadline.

After stocks tumbled at their fastest pace since the

pandemic in the last three days investors showed some signs of

hope early in the day that President Donald 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

while nearly 70 countries have 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 more 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 the U.S. to Trump's threat to

ratchet up tariffs on Chinese imports to more than 100%.

And United States Trade Representative Jamieson Greer said

earlier 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.

According to preliminary data, the S&P 500

lost 75.85 points, or 1.49%, to end at 4,986.40 points,

while the Nasdaq Composite lost 335.35 points, or 2.15%,

to 15,267.91. The Dow Jones Industrial Average

fell 319.58 points, or 0.84%, to 37,657.76.

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

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

gauge' - went back up above 54 late in the session. It had

risen on Monday to its highest level since August last year.

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

and hamper global growth have led to hopes for interest-rate

cuts by the Federal Reserve.

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 )

and Humana jumped after the U.S. announced a

5.06% increase in payment rates to private insurers for 2026

Medicare Advantage health plans.