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Sheaff Brock Managing Director Dave Gilreath offers a possible reason why the market is this strong when news continues to be so bad.
On March 23, 2020, two things happened. Per The Earnings Scout, the COVID-19 death “rate of change” peaked, with a steady descent following. At the same time, the stock market bottomed, then began a sustained rise.
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Obviously, the news continues reporting a rising pandemic death toll. According to Johns Hopkins, on March 23rd, the number of Americans who had died from COVID-19 was 550. Now more than 100,000 are dead. Indeed, on an absolute basis, deaths from COVID-19 continue to rise sharply, even as testing becomes more available.
Fairly constant are consumer fears and the deluge of news about coronavirus. Andy Swan, TDAmeritrade Ticker Tape® contributor and founder of LikeFolio, monitors relative fear levels among the public in near real time. The most mentioned phrase tracked in social media late March was “coronavirus.” It ranked highly in mentions in the financial industry, reflecting “investor fears that are a major driving force behind this period of volatility.”
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What goes largely unreported, Gilreath notes, is that, since March 23rd, the COVID rate of change has been trending lower and lower. Graphing the daily number of deaths is useful, but “readers are still left trying to discern the extent to which the rise from one day to the next is larger or smaller,” fastcompany.com explains.
“No other infectious-disease outbreak has had more than a tiny effect on U.S. stock-market volatility,” Kellogg Insight notes, not even the Spanish Flu of 1918-1920, which killed 2% of the world population. Possibilities offered by the authors for “the unprecedented Stock-Market reaction to COVID-19” include the richness of information and the interconnectedness of the economy.
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