The Stock Market During the Pandemic: Winners and Losers

The Stock Market During the Pandemic: Winners and Losers

(Written by Shea Duffy)

With the coronavirus raging on and the next presidential election right around the corner, the economy has been a hot topic in the news. As a result of many people’s uncertainty in the US economy during these times, the stock market has seen its share of ups and downs. I personally have invested over $5000 of my own money, and have seen many of these ups and downs first hand. However, these volatile times in the stock market may be giving us a glimpse into what the future of the economy looks like, and what businesses and companies will be successful post coronavirus and post election.

The coronavirus took a harsh toll on the market, no doubt about it. During March of 2020, stock prices dropped 15 to 30% over the course of the month, with various resurgences and plunges. Goldman Sachs warned that the US GDP would shrink up to 30%, causing consequences similar to that of the Great Depression. Investors couldn’t pull their money out of the market fast enough. During May, stock prices began to rise again as various lockdowns across the country began to be lifted. Certain companies, however, rose much more than others.

As stocks began to rise once again, clear winners emerged within the market. Pharma and medical device companies prices skyrocketed, as the need to combat the virus and the search for a vaccine continued, and still does. Companies like Teledoc and Livongo rose to all time as a need for telehealth and at home health care became evident. Another section of the stock market that rose was the mining industry. Shaken by the drop in the stock market, and with uncertainty about the economy as the next presidential election looms ahead, people looked to other places to invest their money. Thus, they began purchasing silver and gold, which has its own value independent of the US dollar. This caused an abrupt increase in the stock value of silver and gold mining companies, as people began to purchase more of their product.

Despite the recent resurgence of the stock market overall, some stocks have fallen flat, and can be considered the “losers” of this scenario. The most common type of these “loser” stocks? Retail stores and entertainment venues. Aka any business model based solely on an in person experience. While businesses like Amazon and other services with online options have done fine, retail stores, casinos, chain restaurants, chain hotels, public travel and transportation, and any other publicly owned stocks that rely on in-person business have failed to rebound. This is obviously because of the decline in public outings and gatherings because of Covid-19. Will they be able to bounce back after a vaccine has been created and distributed? Only time will tell. 

Looking into the future, the presidential election is certainly a worrying time for investors. Regardless of which nominee wins the election, there is much uncertainty about the future of the economy post-election. If Biden wins? Almost certainly following would be an increase in taxes and increased regulation in the marketplace, especially on big businesses. If Trump wins? Many investors are worried the actions of the White house will cause foreign investors and businesses to lose faith in the US, and take their business elsewhere as President Trump continues to strain US foreign relations and make polarizing comments about China and other countries. 

The pandemic has had some serious effects on the stock market, but we are just as uncertain about the economy more now than ever. So that begs the question: is it a good time to invest? Optimists would say yes; as scientists come closer and closer to producing a vaccine, and stocks have begun to climb back up, it’s a great time to invest! More cautious investors would say no; as the presidential election looms, and the end of the pandemic seems nowhere in sight, one might want to find other places to save their money. 

Bibliography

Dutta, Neil. “There Are Clear Reasons for the Stock Market’s Surge, despite the Terrible Pandemic News.” Business Insider, Business Insider, 14 July 2020, www.businessinsider.com/why-stock-market-rising-despite-coronavirus-pandemic-higher-us-cases-2020-7.

Shiller, Robert J. “Robert Shiller Explains the Pandemic Stock Market and Why It’s Decoupled from the Economy.” MarketWatch, MarketWatch, 11 July 2020, www.marketwatch.com/story/robert-shiller-explains-the-pandemic-stock-market-and-why-its-decoupled-from-the-economy-2020-07-07.

Shiller, Robert J., et al. “Understanding the Pandemic Stock Market by Robert J. Shiller.” Project Syndicate, 7 July 2020, www.project-syndicate.org/commentary/understanding-us-pandemic-stock-market-by-robert-j-shiller-2020-07

.

I also used articles created by and provided on the Robinhood App, which I use to invest. I also used this app to research many of the stocks referenced in this blog post and have even invested in a few of them myself.