Stocks were down, then up, in this morning’s volatile trading session. Covid-19 anxiety was mostly to blame (as usual) for the market’s low open.
It wasn’t long, however, until small-cap stocks and Boeing (NYSE: BA) led a recovery effort, swinging equities positive on the day.
Helping matters was a new report from the National Association of Realtors, which revealed that pending home sales jumped by a record 44.3% in May.
Still, Wall Street remains wary of a coronavirus resurgence. World Health Organization (WHO) leaders, who have been widely criticized in their handling of information related to Covid-19, are concerned, too.
“Although many countries have made some progress, globally, the pandemic is actually speeding up,” said Tedros Adhanom Ghebreyesus, director-general of the WHO.
“We all want this to be over. We all want to get on with our lives, but the hard reality is that this is not even close to being over.”
Data from Johns Hopkins shows that over 2.5 million Covid-19 cases have been confirmed in the U.S. – a statistic that is truly a double-edged sword.
The higher the number of coronavirus infections, the lower the mortality rate. Deaths related to the disease aren’t climbing at nearly the same pace they were during the initial outbreak. As a result, Covid-19 is looking far less sinister than it once did. A Centers for Disease Control (CDC) official even went so far as to say that 20 million Americans could have the virus.
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“If you multiply the cases by that ratio, that’s where you get that 20 million figure,” the official said last week.
If that’s accurate, the Covid-19 mortality rate falls to 0.6% in the U.S.
Dr. Eric Feigl-Ding, an epidemiologist from Harvard, feels that the CDC estimate could certainly be in the ballpark of the true number of cases.
“I think this estimate is reasonable,” tweeted Feigl-Ding.
“We use serology to estimate flu epidemic as well since we rarely have good testing for flu, but rather serology. It’s not bad news per se. most importantly is the new testing recs for young people regardless of symptoms!”
Herd immunity – another often-used term these days – is now being called into question. If so many are infected, does that mean Americans have gained a natural resistance to the disease?
Not necessarily. Herd immunity usually takes a long time to develop. Sweden’s top epidemiologist, Anders Tegnell, says that it’s been “surprisingly slow” and “difficult to explain why” the Swedish people have yet to reach high immunity levels despite living in one of the few countries to not impose lockdown measures. Only 14% of Stockholm residents tested over the past six weeks have developed coronavirus antibodies.
By comparison, a similar study in Italy found that 57% of Bergamo’s population – the epicenter of the Italian outbreak – have antibodies.
As is often the case with pandemics, the situation remains extremely fluid. What works some parts of the world won’t work in others.
And though plummeting mortality rates will certainly please the market (eventually), for now, soaring infection totals dominate the headlines.
That means that until investors get used to the presence of Covid-19, stocks will continue falling.
Or, at the very least, chop sideways while the Federal Reserve provides even more market-supporting stimulus.