My time spent toiling in the marbled halls of Congress as a staffer gave me the political sophistication to discern when a piece of legislation is stone cold dead, even when the conventional wisdom is holding out hope that it will pass.

For months, I’ve been warning you not to get your hopes up about a second coronavirus relief bill. As the Senate leaves Washington this week for a pre-election break, take it from me: new fiscal stimulus is buried deeper than Jimmy Hoffa.

Wall Street finally faced this political reality on Monday. Stocks plunged across the board, in the market’s worst day in more than a month. At the same time, coronavirus cases are surging to new highs.

The Dow Jones Industrial Average yesterday lost 650.19 points (-2.29%), the S&P 500 shed 64.42 points (-1.86%), and the NASDAQ Composite plunged 189.34 points (1.64%). The CBOE Volatility Index (VIX), aka “fear gauge,” jumped more than 20% to close above 33. The Dow fell more than 900 points intraday. In pre-market futures trading Tuesday morning, stocks were slightly in the green.

The stalemate in Washington over stimulus is sure to exacerbate the economy’s decline, as anxious consumers respond to economic uncertainty by pulling back on spending. Millions of unemployed Americans face a bleak holiday. Corporate earnings will continue to suffer as well.

For the third quarter of 2020, the S&P 500 is reporting a blended year-over-year decline in earnings of -16.5%, according to research firm FactSet (with data as of October 26). “Blended” combines actual results for companies that have reported and estimated results for companies that have yet to report.

Nine of the 11 sectors in the S&P 500 index are reporting a year-over-year decline in earnings, led by industrials and energy, at -58.9% and -123.6%, respectively. Industrial companies are struggling as factories run at lower capacity during the global economic slowdown. The coronavirus pandemic also has crushed energy demand, weighing on oil and gas prices.

The unfriendly skies…

Within the 11 sectors, which specific industries are faring the worst?

The S&P 500 index is comprised of 63 industries. Among these 63 industries, 44 (70%) are reporting or are projected to report a year-over-year decline in earnings for Q3 and 19 (30%) are reporting or are projected to report year-over-year growth in Q3 earnings.

The largest percentage declines are attributable to the airlines (-313%); hotels, restaurants, and leisure (-133%); and oil, gas, and consumable fuels (-129%). The following chart outlines the economic damage:

The airline industry is an economic bellwether; when air carriers suffer it’s considered a canary in the coal mine. Airplanes carry not just passengers but also cargo.

According to the International Air Transport Association (IATA), airlines globally are projected to lose a record $84 billion in 2020, more than three times the loss incurred during the Global Financial Crisis. Airline CEOs have been begging Congress to pass a second stimulus bill that contains an industry bailout, but to no avail. The airlines have been furloughing thousands of workers and the prospects are increasing that at least one major carrier will declare bankruptcy.

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The jobs market won’t properly recover until COVID-19 cases start to go down. However, the coronavirus pandemic is getting worse, not better. Cases are spiking around the country and hospitals in nearly every region are reporting a wave of patients.

As of this writing Tuesday morning, the U.S. is home to more than 8.7 million cases and more than 225,700 deaths of the coronavirus. Any notion that the COVID-19 outbreak is turning a corner is starkly contradicted by the facts. Investors must factor this reality into their investment decisions.

Opportunity from crisis…

Within the beleaguered aviation industry, there’s at least one glimmer of hope that presents investment opportunity: defense contractors. If you’re looking for an investment theme with momentum that’s immune to the pandemic, it’s rising military expenditures around the world.

The U.S. defense budget represents about 40% of the total global defense budget. Since the terrorist attacks of 9/11, over $9.35 trillion has been allocated to the U.S. defense budget. The number is on track to continue growing in future years, making defense-related firms not only profitable investments over the long haul but also a hedge for your portfolio.

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There’s another investment opportunity that allows you to make outsized profits, regardless of the pandemic, the contentious election, or the shaky state of the economy.

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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.