1918 Spanish Flu and the Market

The 1918 Spanish Flu was a global flu pandemic that affected nearly half of the world's population at the time (or up to one billion people).  The 1918 outbreak was the worst of the 20th century, and it fell under the H1N1 virus subtype, which is the same subtype as the current swine flu outbreak.  It's estimated that the 1918 flu killed anywhere from 20 million to 100 million people, which would have equaled a mortality rate of 2.5%-5% of those infected.

The 2009 swine flu is still new to the public, but it is beginning to stoke fear since 152 people have died from it in Mexico as of now.  The current swine flu is nowhere near as bad as the 1918 flu pandemic, but we thought we'd look at what the US stock market did during that outbreak period.  Below we have grabbed a chart from a CDC article on the 1918 Influenza that highlights deaths per 1,000 people infected with influenza and/or pneumonia, and overlayed a chart of the Dow Jones Industrial Average.  There were three pandemic waves from 1918-1919, with the worst coming from October to December of 1918.  While fear of the flu was widespread, the market really didn't react too badly.  Following the first pandemic wave, the market sold off a little bit, but then rallied during the summer months before topping out prior to the second wave.  The market trended downward during the worst wave of the flu outbreak, but it only went down 10.9% from peak to trough, and then it rallied significantly during and following the third wave.  World War I was also coming to an end in late 1918, so the end of the pandemic and the war probably contributed to the subsequent rally in stocks.

 

Comments

[dj]

Relax,their was a swine flu in 1976

[Bob]

Can we have the same analysis but for pharma stocks only?

[Kt]

When people are talking about the Swime Flu and the problems in mexico, one thing that has not yet been metioned is the fact that the medical treatment in mexico is nothing like the US. By this I simply mean that there are many cases of illness that people in mexico not only suffer but die from that is easily treated in america.

[OCD]

dj,,im sorry but your stupid and it makes me so angry that you think that we should just relax because there was a swine flu before. this is the present-that was the past. right now in the PRESENT the swine flu is killing many people and who knows--if you just keep treating it like nothing--then you'll be next to die from it if your not taking caare of yourself. so i dont care if you don't care- but its your head not mine!!!

[Buy viagra]

Hello i can believe that this disease has been with us since the 1918 and kill more people that has do now , its complicated