A new CNBC index that tracks the stock performance of companies working on a coronavirus cure shows just how closely the broader stock market rebound is pegged to a viable Covid-19 treatment or vaccine.
The S&P 500 and the CNBC Covid-19 Testing & Treatments Index have moved in near lockstep since the market bottomed on March 23. A look at their movement since the March bottom reveals the S&P 500 and the Covid-19 index tend to rise and fall at the same time.
The relationship between the two reveals just how important coronavirus news is to Wall Street investors, who have for weeks said a reliable treatment is key to unleashing financial markets and an eventual return to all-time highs.
The index jumped 2% on Monday as the S&P 500 gained 1.3%.
CNBC's Covid-19 Testing & Treatments Index is equal-weighed and currently comprised of 29 companies that are working on testing and treating the novel coronavirus. Its components are a mixture of pharmaceutical and biotechnology companies ranging from Cambridge, Massachusetts-based Biogen to Foster City, California's Gilead Sciences.
Its largest components by market value are Johnson & Johnson, Pfizer, Roche and Novartis. The companies that make up the index will be updated as more companies become involved in the development and production of potential Covid-19 remedies.
Readers can track the new index here or find it on CNBC.com through a quote query for ".COVID19".
What's interesting is that the index of stocks earlier in the year was inversely correlated to the market because as fears about the virus grew, investors huddled in these biotechs and sold the market.
Now these two forces appear to be on the same team with the move higher in the treatment index leading the move higher in the market.
"The debate has shifted from how deep the recession will be to how quickly the economy recovers," Dennis DeBusschere, head of Evercore ISI's portfolio strategy, wrote in a note on Sunday.
"The outlook for economic growth, and by extension, a more enduring rotation into Cyclicals, is increasingly dependent on a cure/treatment for Covid that reduces the risk of rolling lockdowns," he added.
The illness has infected nearly 3 million worldwide, according to the latest official numbers. There have been 965,000 confirmed cases and more than 54,000 deaths in the U.S., per data from Johns Hopkins University.
Here is the full list of companies that comprise the CNBC's Covid-19 Treatment Index as of April 27, sorted by market value: