Financial Markets and News About the Coronavirus

From its February 2020 peak to a March 2020 trough, the S&P 500 index fell 34 percent.  This fall was accompanied by extreme volatility, at a level last seen during the global financial crisis.  Invariably the selloff was accompanied by media speculation about the onset of another Great Depression.  However, the incidence of COVID-19 cases during most of this selloff was not yet at extreme levels, as evidenced by Exhibit 1 below.

Exhibit 1: S&P 500 index and incidence of global COVID-19 case counts, as reported by the Johns Hopkins COVID-19 dashboard.  Source: Bloomberg.

So what drove the precipitous market … Read more