I’m sure we are all aware of the world-wide pandemic that is happening right now, the coronavirus. The coronavirus spreads via person to person contact. This can happen when people are within 6 feet of each other or when a person coughs or sneezes and the water drops from their respiratory systems make it into yours. This can happen in two ways, the first one is the drops get onto your skin and you touch your face, specifically your eyes, nose, and mouth because these are your primary nasal passages. The second one is if you breathe in the drops and they just go straight into your own lungs/respiratory system. With that being said, since the coronavirus has just been upgraded to a pandemic which means it now affects the whole world, please take extra precautions to stay safe. Other than that, since it is affecting the whole world this also means the stock market. Don’t understand? Let me explain.
The stock market according to The Balance “...works like an auction where investors buy and sell shares of stocks; These are a small piece of ownership of a public corporation.” From that, it is just a way for people to make money or lose it by bidding on other peoples’ companies. The stock market rises and falls for many reasons and can vary with many different situations, feelings are one of those. Feelings affect the stock market in so many ways. If people are confident in the future, the stock market will typically go up. The only bad thing about the feelings is that if people are uncertain and not confident then the stock market will go down because people will not want to buy if they don’t know what will happen to their money in the future. Many other things affect it too, things like inflation. Inflation is how much money is worth, like money in 1911 was worth much more than money is in 2020.
On the relation of uncertainty in the stock market, let me explain the effect the coronavirus is having on our stock market. For example, if people are getting laid off because of the virus then they are not getting new cars. If this happens the value of the car company will go down thus possibly bringing the stock price of the car company too. Notice how I didn't say will I said possibly will. This is important, like I said before, feelings play such an important role in the stock market. By doing so another way the virus is affecting the market is the uncertainty. This was already a problem but it is now worse because all the money you wanted to invest or have already invested is now in the shaky hands of this world-wide pandemic. See how that could make someone nervous? The coronavirus has affected the stock market in a mostly negative way. So far, the Dow Jones Industrial Average has dropped 24.8%.
Story by Hadley Wallace