The Dynamic Impact of COVID-19 Pandemic on U.S Stock Market Returns

Abstract

The global stock market experienced significant detrimental effect during the COVID-19 pandemic era. In the United States, the pandemic had considerable influence on the stock market. Notably, the pandemic negatively impacted the stock market from March, 2020, before there was a recovery from Dec, 2020. During this period, the pandemic significantly increased risks and uncertainties in the U.S. stock market. Particularly, the S&P 500 index during that period exhibits the dynamic significance of coronavirus on the stock market. Price movements in the financial markets resulted from price changes in the S&P 500, which led to a market meltdown. The COVID-19 index raised volatility, which sparked frenetic trading on the stock market. Notably, the epidermic flare-up had caused the S&P 500 index to lose 34% of its value as of August 2020. Also, the index's value fell by 86% as a result of the lengthy market collapse. However, the timely, obligatory, and successful anti-epidemic measures taken by governments led to a positive performance of stocks. As a result, the COVID-19 contagion’s impact on stock returns in the U.S. transformed from negative to positive performance.