Why did stocks recover while the virus was still spreading?

Markets looked ahead to recovery

Pandemics and markets

February 2020: stock markets were at record highs. Five weeks later, they'd had one of the fastest crashes in history. The trigger: a virus.
As COVID-19 spread, the S&P 500 fell about 34% between 19 February and 23 March 2020. Markets from Jakarta to Madrid fell just as hard.
Travel stopped, so oil demand collapsed. In April 2020 one US oil contract briefly traded below zero (chart).
Central banks cut rates to near zero and restarted QE; governments sent cash to households and firms. It was the biggest rescue ever.
US stocks hit new highs by August 2020, while the pandemic was still raging. Markets look ahead, not at today's headlines.
Common mistake
Mistake: panic-selling at the bottom. Those who sold in March 2020 locked in their losses and often missed the rebound.
Key takeaway
Crises hit fast and hard. A plan, an emergency fund and diversification beat panic, and past rebounds don't guarantee future ones.

What happened to oil demand in 2020? It collapsedWith planes grounded and people at home, far less fuel was needed.
Central banks responded by... Cutting interest ratesCheaper money and QE aimed to keep credit flowing through the crisis.
Panic selling at the bottom... Locks in lossesSelling turns a temporary fall into a permanent loss and misses the rebound.
Why did stocks recover while the virus was still spreading? Markets looked ahead to recoveryPrices reflect expectations, and central banks and governments were pouring in support.