Everyone wants the answer to this question these days. As the expanding coronavirus pandemic pushed the market into bear territory earlier this month, investors fled from stocks across industries. The Dow Jones Industrial Average is down 23% since the beginning of the year and is at its lowest level since November 2016. The S&P 500 has declined 21%.

An investor holds his head while looking at an electronic board showing a market drop.

Image source: Getty Images.

In the meantime, even efforts to support the economy haven't been enough to cheer the stock market. For example, the Federal Reserve on Monday announced a broad effort including purchases of Treasury securities in "the amounts needed to support smooth market functioning." The Fed will also buy corporate bonds and support the flow of credit to consumers and businesses. And still, the Dow and S&P 500 fell. The $2 trillion stimulus package could catalyze the U.S. market, but the progress from the cash injection could prove to be temporary if long-term solutions aren't found.

In many cases, to estimate when a market recovery will come, we can turn to the past. According to Fidelity, an average bear market loss is about 40% and it takes about 22 months to recoup those losses. The math is helpful, but it's hard to apply to the current bear market due to the cause of this recent downturn. To understand when the market might start to recover, we have to get to the root of the problem -- why it fell. Well, we all know the answer to that. The COVID-19 outbreak, which began in China in January and progressively made its way across the world, set off the move into bear territory.

Crisis expands, problems expand

Now here comes another question: Why has the decline been so extreme? Probably because the crisis is so extensive. The coronavirus so far has resulted in more than 417,000 cases worldwide, and the outbreak has transformed into a pandemic, with countries in Europe on lockdown and growing cases in the U.S. prompting governors in many states to ask their residents to stay home to avoid contamination.

At the same time, companies are struggling on many levels. When the crisis began, companies relying on manufacturing in China faced supply disruptions as factories closed. Mattel (MAT -0.70%) and Hasbro (HAS -0.77%) are good examples, as about 70% of all toys are made in China. Companies with sales in China also lost out, and tourism-based businesses such as airlines saw declines in business as travelers canceled trips.

As the crisis expanded well beyond China, so did the problems. Nike (NKE), which closed shops in China earlier in the crisis, now has shuttered stores in North America and elsewhere. And Starbucks (SBUX -1.14%) has moved to a temporary drive-through only model and closed some locations.

When the crisis was limited to China, the idea was that companies without dependence on the country would be safe havens. Today, companies operating just about anywhere will face the challenges of supply disruptions, closed shops, and fewer customers. And that is going to show up in the current quarter's earnings reports. The length of the health crisis will determine whether this will be a single-quarter event or if it will affect future reporting periods. At the moment, as cases continue to climb daily in Europe and North America, it seems likely that at least the start of the second quarter will take a hit as well.

The new normal?

The market will recover, though the current instability and pessimism is the new normal while the coronavirus keeps spreading. A decline in the number of new coronavirus cases in major economies may represent an inflection point. Still, the outbreak could haunt the market until the earnings reports are cleared of coronavirus effects, and that could take time.

Though it's impossible to predict when the market will recover, history shows it always does. In the meantime, investors should seek out companies with long-term earnings prospects that will thrive once the outbreak is over.