Whenever I walk away from my computer to make a fresh pot of coffee, it seems as if three news cycles have come and gone before I get back. The incessant flurry of dire headlines is whipsawing investors and generating extreme volatility.

The three main U.S. stock market indices closed higher on Monday due to optimism that the coronavirus is waning. Stocks opened sharply higher Tuesday but then, as the breadth of the recession became more apparent, the markets went on a wild roller coaster ride and closed slightly down.

The Dow Jones Industrial Average yesterday gave up a 900-point rise in a single trading day, exemplifying why it’s too soon to chase rallies. As of this writing on Wednesday, all three indices were trading higher on renewed optimism about COVID-19. But trading remains volatile, as investors rely more on blind guesswork than hard data.

Coronavirus Task Force member Dr. Anthony Fauci stated on Wednesday that coronavirus-related deaths could be fewer than previously expected and a slowdown in the pandemic might start occurring as early as next week in hard-hit places such as New York City.

Then again, what Fauci didn’t say was that the death rate could pick up in new hot spots, such as southern states that came late to social distancing. By the time it takes me to walk into the kitchen to brew a cuppa joe, today’s optimistic news could all turn horribly wrong.

The short-lived rallies that occurred during the 2008-2009 financial crisis are instructive. On several occasions, upward bursts in stock prices turned out to be bear market traps that were followed by new lows.

Below, I’ll explain why any investor exuberance over the short term is misguided. Wall Street is desperate to put this bear market in the rear view mirror, but the travails of Main Street are too deeply entrenched.

Investors hoping for a “V” shaped recovery after the coronavirus pandemic burns out are mistaken. This economic downturn isn’t occurring under the normal circumstances of a natural disaster. Because of COVID-19, consumer spending has been dampened by job losses caused by the government-mandated shuttering of economic activity.

When the world gets back to “normal” after the pandemic has passed, many consumers will still lack the financial wherewithal and confidence to immediately open their wallets again.

Small businesses, which make up most of the economy, have been devastated (many beyond repair). That means we must endure the lingering effects of recession, with a gradual bottoming out and slow initial recovery, as we witnessed in the wake of the great recession of 2008-2009. The economic damage from COVID-19 will be longer-lasting and far more insidious than, say, the wreckage of a hurricane.

The federal government’s $2.2 trillion stimulus package will certainly help, especially its provisions for extended unemployment benefits and small business assistance. That puts money into the hands of Main Street’s breadwinners. But many analysts say that the stimulus is not nearly enough and more needs to be done.

Congress has shown reluctance to pass another stimulus bill. At the same time, debate is growing as to whether the feds should bail out shaky junk bonds. As indebted corporations struggle to cover their loan payments, echoes of 2008 abound.

Profits won’t miraculously recover…

With a wide swath of U.S. industries compelled to slash capacity or close altogether due to social distancing, corporate earnings estimates for S&P 500 companies are in free-fall.

Read This Story: Corporate Profits Fall Off a Cliff

According to research firm FactSet, the data provider for Investing Daily, the first-quarter bottom-up earnings per share (EPS) estimate plunged by 9.1% (to $36.97 from $40.68) from December 31 to March 31. The estimate is an aggregation of the median EPS estimates for Q1 for all the companies in the index. The following chart shows just how bad that decline looks within historical context:

During the past five years (20 quarters), the average decline in the bottom-up EPS estimate during a quarter has been 3.2%. During the past 10 years (40 quarters), the average decline in the bottom-up EPS estimate during a quarter also has been 3.2%.

During the past 15 years (60 quarters), the average decline in the bottom-up EPS estimate during a quarter has been 4.5%. Accordingly, the decline in the bottom-up EPS estimate recorded during the first quarter was larger than the five-year average, the 10-year average, and the 15-year average.

Granted, the decrease in Q1 2020 was considerably smaller than the declines of -34.3% and -31.3% recorded for Q4 2008 and Q1 2009, but that was a period when it appeared that global capitalism might actually collapse.

At the sector level, 10 sectors recorded a decline in their bottom-up EPS estimate during the quarter. The worst performer was (not surprisingly) the energy sector at -54.8%.

Read This Story: The Energy Bear Mauls Wall Street

Stocks also swooned during this period. From December 31 through March 31, the value of the S&P 500 index decreased by 20.0% (to 2584.59 from 3230.78).

The arithmetic is simple. Stock prices reflect projected corporate earnings growth. Not only has the pandemic clobbered corporate earnings, but the aftershocks of social distancing will make it difficult for companies to start making money again. Consumers comprise about 70% of gross domestic product and they’re likely to remain in a defense crouch into the foreseeable future.

It’s also worth noting that optimistic scenarios about a quick economic and market recovery are predicated on the virus disappearing sometime in late spring or early summer. That’s a highly risky assumption.

Like a diabolical creature in a horror movie, COVID-19 has shown the ability to mutate into new strains and re-infect people. What’s more, any hopes for a vaccine or “silver bullet” cure are fantasies or, at worst, irresponsible quackery. Vaccines take considerable time to develop.

The stock market’s partial rebound is welcome but probably ephemeral. Fear has rapidly replaced greed on Wall Street. Healthy markets take the stairs, not the elevator. Stay cautious.

If you’re looking for specific ways to incrementally position your portfolio for the day when normalcy returns, read the advice in my recent story: Investing in a Post-COVID World.

John Persinos is the editorial director of Investing Daily. You can reach him at: mailbag@investingdaily.com