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As the number of COVID-19 cases continues to rise in the U.S., the stock market has generally been moving in the opposite direction.

Concerns that the global pandemic will cause an accompanying economic crisis came sharply into focus earlier this week.

The Dow Jones Industrial Average fell by nearly 13% Monday, marking the worst day for stocks since the 1987 sell-off known as “Black Monday.” By midweek, the index had fallen to a three-year low.


And on multiple occasions this week, the S&P 500 plummeted so quickly that it triggered a precautionary halt in trading meant to prevent extreme losses.

Joe Leibfried, a financial advisor with StackStone Wealth in Dubuque, has kept a close eye on these developments.

“I don’t know if there is a true historical comparison,” he said. “It certainly feels like we are in uncharted territory. Really, every person in the world is feeling an impact from this.”

The Dow on Thursday recorded modest gains, inching upward by less than a percentage point. Overall, the index has fallen by about 30% in the past month.

Mark Stevens, chief investment officer for Heartland Financial USA, acknowledged there “is no template” to fall back on as financial experts assess the current and future state of affairs.

Losses have not been as extreme as those observed over the course of the Great Recession, which lasted multiple years. But recent declines have occurred at an unusually rapid pace.

“This has happened so much quicker,” Stevens said. “It has been immediate.”

Loren Rice, an associate professor of accounting and business at Clarke University, called the stock market’s recent nose dive “unprecedented.”

He believes there is an emotional element to these fluctuations.

“Markets can become extremely volatile when people are afraid,” said Rice. “Right now everyone is trying to process all this new information and it is changing hour to hour. It is leading to more fear and more volatility.”

In light of these trends, Rice believes that some investors — in particular, those who need access to their money in the next 10 years — should get out of the market.

Rice would not be surprised to see the market’s free-fall continue. He believes a steep-enough drop could prompt President Donald Trump to shut down the market, an option which Trump recently said he will not consider.

“As a rule, when a president comes out and says they’ll never do something, it usually means they are thinking about doing it,” Rice said.

Others are more optimistic.

Leibfried noted expectations for rising COVID-19 cases already are priced into the market, meaning that further spread of the virus wouldn’t necessarily send stocks lower.

“When we get to the point where there is some positive news around it, like the amount of new cases declining, we could see a meaningful rebound,” he said.

Stevens believes a lack of historical precedent has complicated efforts to predict what comes next. At the same time, an abundance of fear has led to “indiscriminate” selling of securities.

Given this climate, he believes investors should think twice before making rash decisions.

“The better option is to wait until we understand more about this crisis and its economic impacts,” he said.

While the initial descent has been swift, the long-term trajectory of the market is more difficult to project.

Chinese officials on Wednesday reported no new locally transmitted cases, marking the first time the nation could make that claim since the outbreak started in December.

While this containment provides reason for optimism, U.S. officials have warned that the coronavirus pandemic could go on for more than one year. A longer timeline could spell trouble for the economy.

“There are some businesses that cannot withstand a three-to-four month break in business activity,” Stevens noted.

Rice isn’t expecting a swift economic turnaround.

He said those with dwindling 401(K) accounts will be less likely to spend money in the future and noted that current spending patterns aren’t particularly encouraging either.

“People are spending like crazy on staple items with low profit margins,” said Rice. “They’re not buying cars. They’re just buying extra toilet paper.”

As Leibfried guides clients through these uncertain times, he preaches a combination of urgency and caution.

“We recommend you overreact when it comes to your health and hygiene,” he said. “And we suggest that you under-react as it relates to the markets.”