How the coronavirus caused an immense downfall in the stock market

The infamous Coronavirus, otherwise known as  COVID-19, as it has spread around the world, has caused many casualties, as well as an immense downfall in the stock market. Unlike the crash in 2008, this stock market crash was caused by a pandemic which made it even worse. However, just because companies’ stock prices plummeted, it doesn’t mean that the companies are in bad shape. This would help reform everything later on once the stock market reaches its former glory. 

 

During the first weeks of March, the stock market dropped 7% as they almost began a “circuit breaker” protocol had the S&P fell more. The first two levels of this protocol would’ve restricted trade for the next 15 minutes so people calm down and refrain from nervously selling their stocks to recover lost money. On the other hand, the third level would’ve restricted trade for the rest of the day. The S&P 500 and the Dow (stock market in general), have both dropped drastically due to the uncertainty revolving around the global Coronavirus pandemic. 

 

The Coronavirus has created huge sets of uncertainty in the market. There were two factors which were the casualties and the impact of the casualties on the day-to-day business. As the virus spread, most countries around the world began to realize how unprepared they were for this deadly pandemic. Due to this sense of unpreparedness, an instability would thus start to develop in the healthcare market which would, unintentionally, start a chain reaction. Once the instability was obvious, all the different economies started to shut down; the confidence of stock markets around the world was shut. All this happened in addition to the fact that there were very limited acts of business transactions being conducted. All of this connects to the stock market because the market hates uncertainty. The market didn’t know how to react to the expansion of the pandemic, so numbers and prices began to drop dramatically. Therefore, people didn’t want to invest in the market because they didn’t know what to invest in, or how the numbers would fluctuate due to the spreading uncertainty.

 

After reading about the stock market, I asked my classmate Micheal Stiberman how soon the stock market will go back to normal, and he gave me this answer, “Get used to the market being this low because it won’t rise for another couple of months.”

 

Even though the market suffers heavily, CNBS says “Over the last century, there have been crashes, but each time, the economy rebounds and the stock market expands.” The Government is going to extreme measures to try and end the downfall of the market, and most importantly the coronavirus in general. COVID-19 exposed many weaknesses and flaws in the market; after the world has recovered the stock market will strive to patch those holes up to put the market in the best position it has been. CNBS explains, “Coronavirus recovery offers us the opportunity to build stronger and more equitable systems.”

 

I asked my fellow classmate, Moy Sutton, what he thought about this incident, and responded as follows, “Honestly, this entire incident has had only negative effects. The stock market will soon rise up to how it was before but for now, it will stick to being in this drought.” 




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