October 28, 2020

The S&P 500 tends to fall when Google searches for COVID rise, and searches are creeping up again, DataTrek says

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  • The S&P 500 is inversely correlated with rising Google searches for “COVID”, DataTrek said.
  • In a note on Tuesday, DataTrek’s co-founder Jessica Rabe said: “Google search volumes for “covid” are rising again, which is troubling because Americans’ level of interest has been inversely correlated with US equities since March.”
  • US president Donald Trump and First Lady Melania Trump tested positive for COVID-19 last Friday. 
  • DataTrek said the google searches began rising in mid-September.
  • Coronavirus has killed more than 1 million people globally, and a number of European countries such as the UK, Netherlands and Spain are facing a much feared second wave. 
  • Visit Business Insider’s homepage for more stories.

The S&P 500 has tended to trade in the opposite direction to how often people are Googling the term “Covid” this year, and in the last week, following US president Donald Trump’s hospitalization for the disease, the volume of searches is creeping up, hinting at another decline in the stock market, DataTrek said Tuesday. 

“Google search volumes for “Covid” are rising again, which is troubling because Americans’ level of interest has been inversely correlated with US equities since March,” Jessica Rabe, co-founder of data analyst DataTrek, said in a note:. 

While stocks may be vulnerable to other factors such as the US presidential election, and the Q3 season, the uptick in searches for “Covid” is a “red flag for US equities,” she said, adding that searches began rising in mid-September, as the S&P was halfway through a 10% correction that lasted nearly four weeks. 

The S&P posted its  first monthly drop in six months in September. Investors exiting tech stocks was one of the main reasons behind the decline, but a second wave of cases of COVID’19, particularly in Europe, also contributed to some weakness. 

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US president Donald Trump and First Lady Melania Trump said they tested positive for Covid-19 last Friday and the president was admitted to military hospital hours later. The S&P 500 closed lower on Friday in line with broader indices, but still gained on a weekly basis. 

Trump was discharged from hospital on Monday, but Covid-19 is back at the forefront of investors’ minds. 

DataTrek said searches for the word “Covid” waned throughout August/early September, when the S&P 500 hit an all-time high of 3,588.11 on September 2. 

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“Queries for “covid” peaked during the two weeks from March 22nd through April 4th; the S&P 500 bottomed on March 23rd,” DataTrek said. 

The S&P 500 has risen around 55% since touching multiyear lows in March when widespread coronavirus lockdowns kicked in. 

Queries started rising throughout June and reached their second peak at the end of June/early July, DataTrek said. 

“Global searches for “Covid” are still a little over halfway to the peak back in March, showing it continues to dominate attention not just in the US, but also globally,” Rabe added. 

Coronavirus has now killed more than 1 million people and infected almost 36 million. A number of European countries such as the Netherlands, the UK and Spain are seeing a resurgence in cases and instigating local lockdowns in some areas. In the US, a number of schools have shut down in New York’s coronavirus hot-spots to control rising cases.