The news headlines are horrific but investors seem unflappable. It brings to my mind the title of this classic R.E.M. song: It’s The End Of The World As We Know It (And I Feel Fine).

American cities are ablaze with violent protests, a deadly pandemic bedevils the world, and the President of the United States was sequestered yesterday in an underground White House bunker to protect him from rioters.

Wall Street’s response to this dystopian tableau? A collective shrug.

The three main U.S. stock market indices all closed in the green yesterday, with the Dow Jones Industrial Average up by almost 100 points. As of this writing Tuesday morning, the three indices are poised to open higher.

The disconnect between stocks and political-economic realities is striking. Let’s look at the latest data for clues. Perhaps a day of reckoning awaits, or maybe the optimism is justified.

Watch This Video: The Calculus of COVID-19

The IHS Markit euro zone manufacturing Purchasing Managers’ Index (PMI) was released on Monday and at first glance it wasn’t pretty. The PMI is a measure of the current direction of economic trends in the manufacturing sector. The PMI is based on a monthly survey of supply chain managers across 19 industries, encompassing both upstream and downstream activity. For the euro zone in May, the index rose to 39.4 from 33.4 in April.

In a separate report, the Institute for Supply Management’s (ISM) U.S. manufacturing index inched up 1.6 points to 43.1 in May. A reading above 50 in these surveys marks expansion while a reading below signifies contraction.

The U.S. Commerce Department on Monday released a construction activity report that was far better than feared. U.S. construction spending dropped 2.9% in April, still a bad number but better than the consensus expectation of -6.5%.

Taken at face value these latest economic reports are dreadful, but they also suggest that perhaps we’re turning the corner. This tentative optimism is generating a tailwind for stocks.

U.S. and global stock market benchmarks hover near three-month highs and safe-haven government bonds have been edging lower, as slightly brighter growth prospects enhance the appetite for risk-on assets. Violent protests in the U.S. against police brutality and the Sino-American trade standoff are keeping stock market gains in check, but the markets no longer seem on the brink of collapse.

However, as recent history has reminded us, the situation could all change in the blink of an eye. The Fear of Missing Out could easily lapse into just plain fear

The ticking debt bomb…

An explosion of the global debt bomb could be the next “black swan” event. Even before COVID-19 stimulus measures, global debt already had reached massive proportions (see chart).

In 2020 to combat the coronavirus, central banks and governments worldwide have launched at least $15 trillion of stimulus via bond-buying and budget spending. However, economists at JPMorgan Chase (NYSE: JPM) are warning that the adverse economic and financial consequences of the coronavirus are pressuring credit and funding markets, with major defaults looming ahead.

We could avert a debt-triggered calamity if the economic recovery is strong enough. The summer months will prove pivotal, as we learn the fallout from the reopening of economies. Scientific health statistics will indicate whether we can safely accelerate the removal of social distancing strictures without the resurgence of a second wave of new coronavirus cases.

From the financial to the biological…

The U.S. has witnessed a decrease in the rate of new cases, but progress in “crushing the curve” has leveled off as new regional hot zones emerge. Whether the economy enjoys a robust and sustainable recovery largely hinges on biological and not financial metrics.

Rumors of new vaccines periodically cause stock market spikes, especially for the biotech companies directly involved. However, I tend to ignore such stories because they’re usually based on wishful thinking and unfounded rumor.

Health experts say that it would take many months if not years to develop an effective vaccine, if it were even possible at all. And let’s say a vaccine were developed. Vaccinating sufficient numbers of people would pose a huge logistical challenge for health delivery systems already stretched to the breaking point.

Vaccine misinformation is rampant and often spread by fake news sites that are designed to undermine faith in science. In recent weeks, we’ve seen hopes about a new COVID-19 vaccine wax and wane. Don’t succumb to vaccine hype.

That said, I like major health services stocks now. Established medical and drug providers typically enjoy strong cash flow, solid balance sheets, and long histories of earnings and revenue growth. They’re “essential services” plays that are recession-resistant.

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In the meantime, don’t get complacent about prevailing risks. The following story can help you position your portfolio for defensive growth: Investing in a Post-COVID World.

Stay cautious, but don’t get spooked by end-of-the-world scenarios in the media. Global capitalism has withstood worse challenges.

In high school, I remember getting nervous by reading The Population Bomb (1968), a best-selling book by Paul Ehrlich that predicted the collapse of civilization in the 1970s and 1980s due to overpopulation and mass starvation.

Ehrlich turned out to be wrong, of course. Predicting imminent apocalypse has become a cottage industry and the Doctor Dooms are out in full force these days. But tune them out and stick to your long-range investment goals. Your older self will be grateful.

John Persinos is the editorial director of Investing Daily. Send comments and questions to: mailbag@investingdaily.com