The market comeback makes sense when looking at the make-up of the S&P 500

Published Mon, May 18 20207:23 AM EDT

The stock market's rally from the lows reached in late March has left many investors baffled as joblessness soars during the coronavirus pandemic. But a look under the surface might help explain the market's resilience despite the recent economic hardship. Ed Clissold, chief market strategist at Ned Davis Research, found that 58% of the S & P 500 's total market cap comes from coronavirus "winners" while 30% comes from virus "losers." A "winner" in this case is defined as a business that "has not been meaningfully impacted by, or in some cases benefited from, the pandemic," Clissold said in a note to clients. Coronavirus "losers" are those companies that are "impacted by social distancing or the stoppage in global economic activity." Clissold pointed out the winners have fallen just over 6% since the S & P 500 reached its record high on Feb. 19. The losers, meanwhile, have plummeted over 33%. "Because the COVID winners were 57.7% of the S & P 500 as of 2/19/2020, they have prevented the index from declining more than if they were not in the index," said Clissold. The strategist highlighted Netflix as an example of a coronavirus winner in this context. Since Feb. 19, shares of the streaming giant are up more than 14%. The company also reported last month a massive jump in total subscribers for the first quarter. Netflix said U.S. and international subscribers grew by 15.8 million in the first three months of 2020 . The company saw subscriptions rise by less than 10 million in the fourth quarter of 2019. Disney is an example of a coronavirus loser, Clissold notes, as its theme parks are empty, "ESPN is not airing live sports, and movie releases have been postponed." Shares of the media and entertainment giant are down about 25% since Feb 19. The company reported May 5 a 58% drop in operating income from parks and cruises for its fiscal second quarter . Overall, the S & P 500 has lost more than 15% of its value since Feb. 19. However, the broader-market index has surged about 30% since hitting an intraday low on March 23. Futures on Monday indicated the market was in for another surge. That jump from the lows comes even as the U.S. unemployment rate has soared to nearly 15% while more than 36 million Americans have filed for unemployment benefits. "The stock market has bottomed an average of four months before the end of the recession," wrote Clissold. "The S & P 500 has risen at a faster pace when the unemployment rate has been high and when earnings expectations have been low. Such leading tendencies were supporting evidence of our shift from cautious to neutral, although the upgrade was based primarily on technical indicator improvements."

A person can be seen riding the Charging Bull in the financial distrcict of New York City amid Coronavirus pandemic on April 5, 2020.

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