As COVID 19 hit the world and as a result global economies and markets, investors took risk off the table by selling stocks and putting it into cash/money market.
This selling of stocks makes the market fall further as risk appetite goes away. Please note in the top chart below, which shows where investors money is going, that the same thing happened in 2008. Funds flowed out of US and World stocks and money flew into cash, which in this chart is called liquidity.
Notice that when the economic tide started to turn and the appetite for risk increased in 2009, money came out of liquidity and into the stock market. With interest rates then (and now) almost zero for money market, investors were looking for better returns. It was a multi-year trend with money going out of liquidity and into the stock market in 2009-2011 as the economy healed from recession. And this pushed stocks higher as you see in the bottom right chart.
Why is this significant today? Notice that as of 9/30/2020 more money went out of stocks and more money into liquidity this year than in all of 2008.
As multiple vaccines, which are now in the final phase of clinical trials, are approved and distributed, the economy, which is now growing, will more fully heal at some point. With more money in liquidity today than 2008, stock prices could be once again poised for growth once investors start putting that money at risk again.
When will this happen? This is hard to tell as much has to do with vaccine availability and efficiency as well as the confidence and willingness of people to take them. With elections in less than a month, and COVID being floated as a campaign issue, a stock rebound seems more likely to be pushed off into some time next year. Of course, since we are dealing with a virus that we are still learning about, there is no certainty that this will occur in 2021.
However, the economy will more fully heal, and when it does it is likely we will see an increase in stock prices as investors funds flow from cash into the stock market seeking higher returns.