Updated: Sep 18, 2022
By Shirin Kaye
The coronavirus has been burdening people’s bank accounts by impacting the stock market. The United States’ markets, which plummeted in March due to the fear of the impending outbreak, rose surprisingly in the beginning of April, and have been incredibly volatile during the pandemic. In fact, many financial analysts compare this pandemic’s market volatility to that of other crises in the last decade: there are significantly more jumps due to COVID-19 than there were for any other infectious disease outbreak, and almost as many jumps as for major past crashes. For example, according to one article, the US stock market volatility level over 10-day trading periods during the coronavirus outbreak (as of April 1st) was only surpassed twice in the last 120 years, and is only a little higher than it was during the Great Depression in 1933.
Some finance professionals blame the market’s recent volatility on “behavioral and policy responses.” Due to virus containment efforts like social distancing, business decreases with the decline of labor, goods, and services. Economies of the world are also interconnected, contributing to mass fear due to information about pandemics and public health dangers. Investors are also unsure about what stocks to buy and sell; some believe that the worst has passed and the market can only improve, while others foresee a greater drop.
Despite the overall recession in the stock market, some industries are not just surviving, but thriving. Technology is popularly used as people struggle to remain connected and entertained during quarantine. Medical equipment is in great demand, and healthcare companies are working towards a COVID-19 vaccine. Although companies related to travel and tourism are experiencing a financially draining standstill in business, some brave investors figure that this is a good time to get risky bargains on stocks of companies that they predict will survive the downturn.
History and Economics teacher Dr. Minna Ziskind explains that “the value of a company’s stock is essentially based on how the market (i.e. people) feels about that company’s future success.” Therefore, the stock of an individual firm can perform differently than the market as a whole. She adds that the volatility in the stock market “reflects the overall uncertainty that people feel about the future.” For now, all professional investors, economic advisors, and stock market enthusiasts are muddled with regard to the stock market’s prospects.