Why US Stock Markets Have Recovered So Fast from the Pandemic Crash

Abstract

This paper focuses on why the US stock markets have recovered so fast from the pandemic crash in March, 2020. It selects three types of the independent variables, the pandemic related variables of the US and global infections and deaths, the economic variables of the jobless claims and economic index, and variables of the vaccines and therapies of the pandemic to study which factors have led to the significant changes of the three US major stock indices (DoW, S & P 500 and NASDAQ). The regression analyses of the data from March 1 to October 31, 2020 indicate that it is not the infections or deaths in the US directly and significantly affecting the stock indices, but the vaccines and treatment medicine developments deciding the stock markets movements. In addition, the Weekly Jobless Claims and Weekly Economic Index significantly affected some stock indices. The paper further discusses the prospects of the US stock markets and its long-term threats. This paper is different from other similar studies, using a longer time period of the weekly data (instead of the daily). It also included economic and COVID-19 related medical development variables. It offers a comprehensive and new perspective on the dynamic of the US stock market that is valuable to both investors and policy-makers.