Using the 1918 Spanish Flu as a data point, let’s see what history has to show us. As I’ve stated before, it is a little hard to tell because WW1 was happening at the same time. See attached stock market graph.
The US entering WW1 definitely had a negative impact on the stock market. However, the stock market continued downward after the war ended in November 1918.
Did it continue downward because of the Spanish Flu? It is unclear. Notice how when WW2 ended, there was also a short blip downward, perhaps due to knowing absorbing the troops back into the economy would be challenging. It could be the same thought process used in Nov 1918 after WW1. Or it could be that it continued downward because of the Spanish Flu.
Not often mentioned is the depression of 1920-1921. The current line of thinking is that was caused by the adjustments from a wartime to peacetime economy, labor union strife, and changes to monetary policy.
It is difficult to extract from this what will happen to the stock market due to COVID-19.
