There's the novel coronavirus, and there are the policy measures being enacted to try and restrict its growth. Both the measures and the virus are having a severe impact on the growth of the global economy, and the stock market is busy pricing that in. Unfortunately, it's impossible to know exactly when the COVID-19 pandemic will be constrained and when the global economy can start to normalize.

However, what we can do is monitor some of the data to get a better handle on what's going on. Here's what to look out for.

The word Coronavirus over a blurred world map with some hot spots circled

Image source: Getty Images.

The coronavirus sell-off

Lockdown measures are obviously impacting the global economy. One obvious example is the aerospace industry. Companies like Boeing (BA -2.20%) and airline suppliers like General Electric (GE -1.76%) and United Technologies (RTX -0.68%) are taking significant hits to their share prices as a result. The question is: When will the lockdown measures be eased?

If travel restrictions remain in place as part of the lockdown measures, then passenger traffic will be severely curtailed, leading to a drop in aftermarket revenue for GE and UTC. In addition, airline profitability will slump and orders will be canceled at Boeing -- not good news for original equipment manufacturer (OEM) suppliers like GE and UTC.

GE Chart

GE data by YCharts.

The bullish case

Because the aim of the lockdown measures is to contain the growth of the novel coronavirus, so it can be managed by healthcare systems in the countries taking these actions, it's important to monitor the daily new cases being reported in each of the countries taking the measures.

Of course, the first place to look is the country where the COVID-19 pandemic originated. The good news here is that, at least according to its official figures, China has done a good job of containing the virus. And as FedEx management outlined recently, China's economy appears to be normalizing, with a notable recovery since early March.

The ultra-bullish case for the markets is based on the idea that the rest of the globe will follow, and the global economy will normalize over time. Of course, this also implies that rates of infection won't explode again as containment measures are lifted. It's still early days, but so far China, like Japan and South Korea, is reporting new cases in the double digits rather than the thousands it was reporting during the height of the outbreak there.

COVID-19 new daily case data

One way to monitor events is to compare the timeline of when China initiated stringent lockdown measures, intended to encourage social isolation, to those of some European countries. Of course, this is not an exact science, as different countries -- and even regions within countries, such as Bavaria in Germany -- have taken different actions over different timeframes. However, the dates in the chart below reference the kind of national lockdown measures taken by China and Italy.

As you can see below, China began such measures on Jan. 23; Italy followed on March 11. Clearly, the data shows China's new daily cases peaking a couple of weeks later -- which makes logical sense, as symptoms take time to develop, and suspected cases need to be reported and then tested.

The data also shows that Italy's new daily cases also appear to have peaked a few days earlier than cases did in China after it imposed severe restrictions on social interactions. If this trend continues, and other European countries follow in due course, then investors have cause for optimism -- even if cases in countries like the U.K. peak later, due to its relatively late arrival to the social isolation party.

New daily cases of the novel coronavirus

Data source: Johns Hopkins University. Chart and analysis by the author.

What to look out for

If the lockdowns ultimately work, and there's no sign of an unmanageable resurgence in cases after China and South Korea relax controls, then it seems the handbrake imposed on national economies by lockdowns could be lifted and growth could come back -- hopefully with each economy avoiding a recession in the meantime. After all, the slowdown in each economy's growth is due to a sudden cessation of activity caused by lockdowns; it's not coming from an ongoing deteriorating trend in the global economy.

That said, investors need to keep a close eye on the data. If new cases in the major European countries start trending downwards and the U.S. follows, then investors will feel a lot happier about the market -- and some of the most heavily sold-off stocks, such as Boeing, United Technologies, and General Electric, will bounce back soon enough.