The S&P 500 Index flirted with closing above 3,000 yesterday, even as much of the economic data is some of the worst we’ve ever seen in our lifetimes. We are often asked how this is possible. The reality is the double backstop of historic fiscal and monetary policy combined with optimism over a potential vaccine coming before the end of 2020 has created a surge of market confidence, leading to a massive equity rally.
At the same time, much of the daily data regarding COVID-19 in the US continues to trend lower. “Yes, we have the same worries as everyone else regarding a spike in new cases as social distancing is relaxed and a potential second wave later this year,” explained LPL Senior Market Strategist Ryan Detrick. “But what we know today is the number of new cases, deaths, people in hospitals, on incubators, and in ICU units are all trending lower and making some of the lowest levels seen in months. In other words, social distancing has worked so far.”
Here are a handful of COVID-19 charts we have been watching that indeed show positive trends.
Focusing on the LPL Chart of the Day, the US is closing in on a tragic number of 100,000 deaths, yet the overall daily number have been decreasing significantly.
The 7-day average of new cases is the lowest since early April.
The number of tests in the US has been coming in at more than 400,000 a day recently, and the overall percentage of positive results has been trending to new lows as well. More testing is a key to beating this, and we are seeing it.
The number of new cases in the US was recently up only 1.2% from the previous day, another new low.
Less than 37,000 people were hospitalized due to COVID-19, well off the peak of nearly 60,000.
Similarily, the number of people in the ICU in the US has trended lower and is near the lowest levels since early April.
These are all trends in the right direction and we are seeing similar results in Asia and Europe. Unfortunately, South America is being hit quite hard right now and isn’t yet at a peak. We will continue to monitor these numbers daily for clues as to whether these favorable trends are continuing.