How Has Wall Street Behaved With Other Pandemics?

As the COVID-19 pandemic continues to spread around the globe, stock markets worldwide have taken a tumble. The measures taken by world governments to contain the pandemic have led to a drop in the value of tourism-related companies, like those owning cruise ships and airlines. As mass gatherings are canceled and schools are closed, other industries are sure to also feel the economic impacts of the pandemic. So what has Wall Street done during other pandemics?

2009 H1N1 Influenza Pandemic

The first human case of H1N1-pandemic was confirmed on April 15, 2009. That morning, the Dow Jones Index opened at 7,914 points and closed at 8,029 points. The Centers for Disease Control and Prevention made the announcement on April 21, 2009. That day, the index went from 7,841 to 7,969. The World Health Organization declared a Public Health Emergency of International Concern (PHEIC) on April 25. The index closed at 8,025 on April 27, the first full day of trading after the announcement.

As the pandemic developed and more cases were reported around the world, the stock market remained relatively stable. This was the case even as control measures similar to those being seen today with COVID-19 were put into place: gatherings were canceled, schools were closed and household supplies were hoarded by the population. The Dow closed at 10,548 on the last day of trading for 2009, well after two waves of the disease had made their way around the world.

1918-1919 Spanish Flu Pandemic

During the 1918-1919 Spanish Influenza Pandemic, the stock market was also relatively stable. According to economist Bryan Taylor:

“However, the impact of the Spanish Flu on the stock market was minimal. If you look at the Dow Jones Industrial Average in 1918 and 1919, you can see that the stock market was relatively unaffected by any of the three waves of the Spanish flu. Of course, the Spanish flu occurred in 1918 while World War I was raging in Europe so the war had a larger impact on the stock market than the flu. There were few if any global supply chains that the Spanish Flu could disrupt because the war made supply chains nonexistent. The second and worst wave of flu occurred at the end of World War I when peace was finally achieved after four years of devastating destruction. It is interesting that there was little impact on the stock market of World War I ending on November 11, 1918. Perhaps euphoria about the conclusion of the war was offset by concerns about the Spanish flu.

It is comforting to see that when the final wave of the Spanish flu subsided in February 1919, the market began an increase of 50% which lasted until November of 1919. Whether this increase occurred because of the end of World War I or the end of the flu or both is impossible to say, but it does provide encouragement that once the coronavirus begins to subside, the market will bounce back once again.”

Other Pandemics

There were two other, less severe pandemics of influenza in 1957 and 1968. Data from worldwide markets shows that those pandemics also did not have much of an impact on the markets. The HIV pandemic that began in the late 1970s and continues today has also not had a negative impact on stocks though it has killed millions of people and cost billions in loss of productivity and medical care. There have also been cholera pandemics primarily affecting developing nations. Those, too, do not seem to have affected global markets and trade… though trade did have something to do with cholera being taken to all continents except Antarctica.

Why Is This Happening Now?

The reasons for the stock market downturn in the last few weeks as COVID-19 has spread is varied. Some say it is more social media and the 24/7 news cycle making investors nervous. Others blame the apparent lack of a coordinated response between different levels of government. And others say that this “correction” of the market was long overdue after more than a decade of gains after the recession of 2008. Whatever the reason for the downturn, the market does not see to be behaving like it did in 1918 and in 2009.

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Author: René F. Najera, DrPH

I am the editor of the History of Vaccines site, an online project by the College of Physicians of Philadelphia. All opinions expressed on these blog posts are not necessarily those of the College or any of my employers. Check out my professional profile on LinkedIn: https://www.linkedin.com/in/renenajera Feel free to follow me on Twitter: @EpiRen

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