Coronavirus ‘Winners’ Are Saving the S&P 500 From Imminent Doom

The S&P 500 is comprised mainly of coronavirus “winners,” according to Ned Davis Research. Virus “losers,” meanwhile, make up just 30% of the large-cap index.

US stock market

Some traders are having a hard time justifying the stock market’s recovery in the face of brutal economic data. But a closer look at the S&P 500’s composition proves the relief rally isn't so far-fetched after all. | Image: AP Photo/Mark Lennihan

  • The S&P 500 Index has rebounded nearly 30% from its March lows.
  • Equities are recovering despite unprecedented economic hardship as measured by unemployment, consumer spending, and business confidence.
  • The S&P 500 is dominated by companies perceived to be “winners” in the Covid-19 crisis.

Much has been written about the stark divergence between economic fundamentals and the performance of the stock market of late. The S&P 500 Index has recovered nearly 30% from its March lows despite a record surge in unemployment.

As it turns out, the large-cap index is dominated by so-called coronavirus “winners” as opposed to “losers.”

S&P 500: Coronavirus Winners Dominate

A “winner,” in this case, is defined as a business that,

has not been meaningfully impacted by, or in some cases benefited from, the pandemic.

That’s according to Eric Clissold, the chief marketing strategist at Ned Davis Research.

In a note to clients obtained by CNBC, Clissold said 58% of the S&P 500’s total market capitalization comes from coronavirus winners, while 30% comes from Covid-19 “losers.” The “neutral” category makes up roughly 11% of the S&P 500’s market cap.

As of Friday’s close, the S&P 500 Index was down roughly 15% from its Feb. 19 peak. Virus winners had lost just 6% while losers were down over 33%.

A revision in these numbers will be necessary after Monday’s close as the S&P 500 looks poised for a significant rebound. The large-cap index rose by as much as 2.6% Monday morning, virtually erasing last week’s decline.

S&P 500 Index
The benchmark S&P 500 opened 1.8% higher Monday. | Chart: Yahoo Finance

Stocks Rally on Vaccine Optimism

Equities surged Monday on hopeful news that an experimental vaccine to treat coronavirus is showing promising early results.

Biotechnology company Moderna Inc. (NASDAQ:MRNA) says its early-stage human trial for a coronavirus vaccine produced Covid-19 antibodies in all 45 participants. The company’s stock jumped 21% on the news.

Moderna CEO discusses human trial results: 

Coronavirus news has been a bigger driver of stocks than economic data, according to Paul Chew of Phillip Securities. Whereas economic data are lagging indicators, virus news has a much more immediate impact on the markets.

“Even with better economic numbers, the market won’t rejoice,” Chew told The Wall Street Journal.

On the data front, a key measure of U.S. housing-market sentiment rebounded in May but remained well below the positive threshold.

Data on housing starts, initial jobless claims, and services PMI will be released later in the week.

While some U.S. states are emerging from government-imposed lockdowns, the economic blowback from the shelter-in-place orders will be severe. Gross domestic product (GDP) is on course to contract by 42.8% in the second quarter, according to the Atlanta Federal Reserve’s latest estimate.

Disclaimer: The opinions expressed in this article should not be considered investment advice from

Last modified: September 23, 2020 1:56 PM
Financial Editor of, Sam Bourgi has spent the past decade focused on economics, markets, and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE, Yahoo Finance, and Forbes. Sam is based in Ontario, Canada and can be contacted at [email protected] or at LinkedIn.
Previous Billionaire Pops Stock Market Bubble Because We're Running Out of USD Next Jerome Powell Says Fed Is Not 'Out of Ammunition.' Warren Buffett Isn't Buying It