March 12, 2020
While market volatility currently overwhelms the headlines, we think it is important to take a step back and provide perspective on the markets during the current coronavirus (COVID-19) outbreak as it relates to previous epidemics.
As illustrated in the chart below, a viral outbreak like COVID-19 is not unprecedented. Looking at a dozen epidemics since 1980, we see that despite short-term setbacks, market growth has continued, as indicated by the S&P 500® Index.
Combating the epidemics
S&P 500 Index, January 1980 – March 2020
Source: S&P 500 Index.
What this means for investors
It is important for investors to see these events in perspective with others in history. While immediate market reaction seems drastic, historically, recovery isn’t far off. On average, the S&P 500 Index posted a gain of 8.46% six months following these outbreaks.