AS COVID-19 treatments and vaccines go, so too will the stock market. At least that’s the correlation made between the two thanks to a new CNBC-created index that is designed to track the stock performance of about 30 companies working toward a cure for the virus.
Yes, CNBC’s COVID-19 Testing & Treatments Index has been in lock step with the S&P 500 since the end of March when the stock market plummeted. And further analysis shows that both the COVID-19 Index and the S&P are experiencing their ebbs and flows at the same times. This correlation is a big wake-up call to the country on just how much value investors place in the availability of treatments and cures.
Investors and economists have said for several weeks that proven treatments are the true key to the stock market’s rebound. This new index from CNBC seems to further validate these claims.
So, just what is the COVID-19 Testing & Treatments Index? Specifically, it’s comprised of 29 companies that are either working on testing or treatments for the coronavirus. These companies are a mix of big pharma companies and biotechnology firms located throughout the country. Big players like Johnson & Johnson, Pfizer and Novartis are included on it, as are smaller, lesser-known firms like Gilead Sciences and Biogen.
The index’s performance is perhaps the best indication that investors are betting big on these companies to develop a cure, especially as there’s been a shift in tone away from how deep the recession will be to how fast the economy will recover. That outlook for recovery appears to be directly dependent on viable treatments, the availability of mass testing, vaccines and a cure.
Though the index consists of 29 companies now, CNBC says it’s likely that this number will increase as more firms become involved in the race to treat the virus.
At the time of this writing, there are a number of promising vaccine and treatment trials underway. One potential remedy – remdesivir – has shown positive results in treating patients with the virus, so much so that the U.S. Food and Drug Administration (FDA) has just green-lit the use of it, with even Dr. Anthony Fauci, the Director of the National Institute of Allergy and Infectious Diseases and advisor to the president, claiming that it will set the new standard of care for COVID-19 positive patients. Other potential treatments, like hydroxychloroquine, have shown more mixed results in limited trials.
We’re learning more about the virus each day, and treatments are in ongoing development. Some, like remdesivir, will prove viable, while others won’t. But one thing appears certain – America’s financial recovery is contingent on a proven treatment for the disease.
