My jaw dropped yesterday, when I heard key government policymakers on television confidently proclaim we’re in the midst of a V-shaped recovery and the coronavirus is contained. This rah-rah cheerleading is destined to end in tears, because it’s divorced from reality.

I’m an optimist by nature and I certainly want the pandemic to go away. However, I don’t embrace delusions and neither should you. The coronavirus outbreak is impervious to positive spin and continues to batter the economy and corporate operating results. The latest empirical data from Johns Hopkins (as of Tuesday) indicate that the pandemic is resurgent. Politicians lie, but science doesn’t.

Accordingly, economic and earnings growth projections remain grim, weighing on financial markets. For the third quarter of 2020, the estimated earnings decline for the S&P 500 is -21.8%, based on the latest calculations from FactSet. Last week, the World Bank warned that it may take global economic growth five years to return to pre-pandemic levels.

Stay realistic about the market’s dangers, but by the same token, never panic. Below, I’ll show you smart defensive moves to make now.

The three main U.S. stock market indices on Monday reached their lowest levels in seven weeks, as surging coronavirus cases triggered new business lockdowns and spooked investors. The fight over a Supreme Court seat vacated by the death of Ruth Bader Ginsburg also lessens the already dim odds that Congress will reach agreement on a new fiscal stimulus package.

Watch This Video: As COVID Surges, Stocks Sputter

The Dow Jones Industrial Average yesterday fell 509.72 points (-1.84%), the S&P 500 shed 38.41 points (-1.16%), and the tech-laden NASDAQ declined 14.48 points (-0.13%).

Monday marked the stock market’s first four-day losing streak since the dark days of February. The CBOE Volatility Index (VIX), a gauge of investor fear, yesterday spiked about 8% to reach its highest level in two weeks.

Pre-market stock futures Tuesday were trading mixed, with the Dow pointing to a loss of about 600 points at the open.

Sino-American trade tensions also have returned to bedevil investors. China over the weekend announced the formation of a new regulatory agency with the power to blacklist foreign companies that Beijing deems unfair to Chinese companies.

New lockdowns, new worries…

The stocks of U.S.-based airline, hospitality, and cruise ship companies have been swooning, in tandem with declines in their European counterparts as Britain indicates that increasing COVID-19 cases might cause a second nationwide lockdown. The Bank of England warned Tuesday that the resurgent pandemic would hurt the British economy, with ripple effects throughout Europe.

Crude oil prices have resumed their downward momentum, amid signs of reduced energy demand. The fortunes of the energy sector are generally seen as a proxy for overall economic health.

West Texas Intermediate, the U.S. benchmark, on Monday shed 3.70% to settle at $39.59 per barrel. Brent North Sea crude, on which international oils are based, fell 3.29% to settle at $41.73/bbl. Oil prices are at a level whereby many producers can’t break even. Not surprisingly, energy stocks have been among the pandemic’s worst performers.

Read This Story: The Pandemic’s Best and Worst Performers

The yields on Treasury notes and bonds continue to fall. As of Tuesday morning, the 10-year U.S. Treasury note hovered at the ultra-low yield of 0.66%, a measure of investor anxiety about the economy.

The financial sector got clobbered Monday after an investigation found that several global banks have been involved in illicit money laundering. Leading the declines were shares of Deutsche Bank (NYSE: DB) and JPMorgan Chase (NYSE: JPM) which fell 8.25% and 3.09%, respectively.

Technology shares have plummeted in recent days, as reality catches up with valuations. Mega-cap tech stocks have been driving the stock market rally since the pandemic lows of late March, but stubbornly high unemployment is a reminder that even global tech companies will suffer if consumers are too financially distressed to buy their products and services.

According to the latest estimates from the International Labour Organization, workers could lose between $860 billion and $3.4 trillion in labor income this year alone because of virus-caused economic downturns (see chart).

We could face a looming financial crisis, caused by a perfect storm of inflated asset valuations, mounting corporate, government and private debt levels, and massive fiscal and monetary stimulus. The Federal Reserve’s aggressive intervention has caused equity market distortions, with stocks decoupled from fundamentals.

Read This Story: Will The Fed’s Money-Printing Lead to Ruin?

Economic data are likely to deteriorate in the final months of the year, as consumers pull back on spending due to COVID-19 fears. The onset of the regular flu season is exacerbating those fears.

In the week ahead, keep an eye on the Markit Purchasing Managers’ Indices for manufacturing and services (Wednesday); initial jobless claims and new home sales (Thursday); and durable goods orders (Friday). Any negative surprises among these scheduled reports could cause the already skittish stock market to fall further.

Two appealing asset classes now…

It’s not too late to take actions that will simultaneously protect your portfolio and generate gains. Consider gold and utilities stocks.

The hedges portion of your portfolio should total about 15% of assets. A key component of your hedges sleeve should be gold.

Gold is a proven hedge against crises and it’s poised to continue shining in the coming months, as investment perils increase. For details about our favorite gold play click here.

Also increase your exposure to equities in historically stable sectors, notably utilities. Dividend-paying utilities have demonstrated the ability to weather downturns. Their solid balance sheets make them effective shelters from the storm. Click here for a list of high-quality utilities stocks.

Stay in the investment game. You don’t have to sit on the bench. But remember, cheerleading is for football, not Wall Street.

John Persinos is the editorial director of Investing Daily. Send your questions or comments to mailbag@investingdaily.com. To subscribe to John’s video channel, follow this link.