Without scientific data to back up their claims, many pundits and politicos have been telling us that COVID-19 would simply disappear with the warmer weather. However, the latest statistics point to a resurgence in coronavirus infections and deaths, a dreaded second wave scenario that’s spooking investors.

COVID-19 doesn’t appear as a pontificating guest on CNBC. Nor does it hold press conferences. But the microscopic pathogen always gets the last word.

Investors have gone from bullish to jittery, as COVID-19 cases spike higher. Federal Reserve Chief Jerome Powell’s bleak economic outlook on Wednesday hasn’t helped investor moods.

U.S. stocks plunged Thursday, with the Dow Jones Industrial Average posting its sharpest one-day decline since March 18. The Dow closed down 6.90%, the S&P 500 fell 5.89%, and the tech-intensive NASDAQ composite lost 5.27%.

In pre-market futures trading Friday morning, the three main indices were rebounding. I doubt we’ll witness a resumption of the powerful rally. Considering the magnitude of the excessive speculation we’ve seen in recent weeks, I expect additional sell-offs over the near term. Below, I show you how to trade now.

The long and winding road…

The Department of Labor reported Thursday that about 1.54 million people applied for state unemployment benefits for the week ended June 6. Over the past three months, more than 44 million Americans have filed for unemployment insurance. Powell on Wednesday warned of a “long road” to recovery.

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The Dow and the S&P 500 have erased most of the gains they made this month. The CBOE Volatility Index (VIX), aka “fear gauge,” jumped about 48% to 40.79 on Thursday, its biggest daily gain since March 16.

Fiscal and monetary stimulus helped the stock market recover from its 40% sell-off earlier this year, but rekindled fears about the virus have halted the rally.

Coronavirus cases are rising in the U.S., after appearing to decline. As of this writing Friday, the U.S. has experienced more than 2 million cases of COVID-19, with about 114,000 deaths. New hot spots are emerging in the country, especially in places that haven’t enforced strict social distancing.

States that were spared during the early stages of the pandemic are now reporting a surge in hospital admissions. Many local health systems still aren’t up to the task. Rising infections and deaths could prompt the resumption of lockdowns and business closings, resulting in disaster for the already battered economy.

Single-hit versus double-hit…

The Organisation for Economic Co-operation and Development (OECD) on June 10 released its latest Economic Outlook, detailing the estimated impact the coronavirus pandemic will exert on global gross domestic product (GDP) in 2020.

Under the OECD’s “single-hit” assumption, without a second wave of infections, global GDP is expected to decline 6% in 2020 compared to last year. Here’s a breakdown by country (see chart).

However, according to the OECD, if we encounter a “double-hit” of COVID-19, the global GDP drop is projected to be 7.6%.

The global economy is now experiencing the worst economic downturn since the Great Depression in the 1930s. The OECD report states that “strong fiscal support is warranted but it has consequences. Public spending should be well-targeted to support the most vulnerable and provide the investment needed for a sustainable recovery.” The agency warned that too much stimulus would make global debt levels unsustainable.

The U.S. already was facing a debt problem, largely due to the 2017 tax cuts. Massive federal spending to combat the economic damage of COVID-19 has only made that debt worse.

The private sector is awash in debt as well. The collapse of consumer demand due to the coronavirus is creating cash flow crunches for many businesses, making it difficult for them to service their debt burdens. This dynamic especially hurts smaller companies in the hard-hit travel and lodging industries. Virus-induced supply chain disruptions add to the difficulties.

An influential health expert warned Thursday that deaths of Americans from COVID-19 could reach the grim milestone of 200,000 in September. States were eager to throw open their economies again, which is understandable. But now we’re paying the human price.

Investment moves to make now…

How should you trade? Under any circumstances, if you’re a new retiree or getting ready for your golden years, you must emphasize preservation of capital without incurring a disproportionate opportunity cost.

In these perilous market conditions, you should pivot toward safe havens. “Essential services” plays, such as utilities, health care and consumer staples, are smart bets now.

For more aggressive plays, consider technology companies whose products and services will thrive in the post-coronavirus world. These tech segments include robotics, remote conferencing, cloud computing, artificial intelligence, and 5G wireless.

The hedges portion of your portfolio should total about 15% of assets. I define “hedges” as precious metals (e.g., gold mining stocks) and commodities (e.g., agricultural exchange-traded funds), among other investment classes.

In recent weeks, many financial and political leaders have tried to ignore the coronavirus and go about business as usual. Just as I predicted, that strategy has failed.

The coronavirus is a mindless predator. It doesn’t care about politics, pundits or media spin. It can’t be bullied, jawboned or lobbied.

Stay invested but don’t bet on a V-shaped recovery. The bulls were optimistic that the pandemic would just go away…until biology punched them in the face. Twice.

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