COVID-19 cases are dropping like a rock

·Head of News

Wed, Feb 17, 2021, 11:59 AM3 min read

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A version of this article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Wednesday, February 17, 2021

A version of this article first appeared in the Morning Brief.

As markets rally, the pandemic quietly eases

The stock market continued its rally on Tuesday.

As Sam Ro noted in Tuesday's Morning Brief, the fundamental backdrop for stocks continues to improve as fourth quarter earnings have rolled in. The market's performance in 2021 reflects this strength.

But amid a flurry of interest in markets as a result of Bitcoin's rally and the wild swings in GameStop (GME) that captivated the public last month, what has been somewhat overlooked by investors is the improvement we've seen in the pandemic.

And specifically in the declining number of new COVID-19 cases and COVID-related hospitalizations over the last few weeks.

On Monday, the number of new COVID cases recorded was the lowest since mid-October while recorded COVID-related deaths were the lowest since Nov. 30. Hospitalizations are down about 45% from their January peak.

And while winter weather across the country will disrupt this week's vaccination plans and potentially depress testing totals, the overall trajectory of the virus in the U.S. has been clear over the last few weeks.

Readers will know that for months here at The Morning Brief we've emphasized the importance of rates of change and how investors look for things that are getting better or worse, not just things that are absolutely good or bad.

And while the pandemic remains a very bad situation, it is getting better. And quickly.

Daily new COVID infections continue to decline across the country. (Source: Goldman Sachs)

Of course, this does not mean the pandemic is over. Or even close to it. The more contagious B.1.1.7 variant is spreading through the population with confirmed cases in 40 states. Dr. Anthony Fauci also pushed back his expectations of when most Americans will have access to a COVID-19 vaccine by about six weeks on Tuesday.

This improvement in the data was to some extent expected as the impact from the holidays wore off and the distribution of vaccines continued. If we want to argue about what the market was "pricing in" on the COVID front, a springtime improvement and a mostly normal summer in the U.S. seemed like the base case.

On the other hand, as Bloomberg columnist Conor Sen noted earlier this week, the model from at least one Wall Street firm suggested a peak in cases wouldn't peak until next month. And while a resurgence of the virus cannot be ruled out, data suggests that nearly 40% of the population has either been infected or inoculated against COVID-19.

And so as we sit here today, we can say with confidence the pandemic situation in the U.S. is getting better. And for investors it is this direction which matters most.

By Myles Udland, a reporter and anchor for Yahoo Finance Live. Follow him at @MylesUdland