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This has been a crazy year for the stock market. In January and February, most investors did not take the reports of a new virus in Asia seriously and kept pouring money into the stock market, with the market reaching all time highs in late February. Very few investors bet that the virus would spread and shorted the market (also a few Senators with top secret briefings sold their stocks). But in March, when the virus started spreading in the U.S., stock markets overreacted and people anxiously pulled out more of their money from the market than was necessary. While the stock market hit a low in March, since then the stock market has had one of the fastest growth periods in history. By the end of August, stocks had regained almost all of their lost value from the pandemic, yet the world remains in a deep economic downturn that will likely take years to fully recover from and companies have decreased sales and persistent lost value. In this article we will try to answer the question of what has fueled the crazy swings in the market and discuss scenarios for what will happen next.
Stock Market Recovery
By August 2020, the stock market had recovered all the losses suffered during the pandemic fueled selloff that had occurred in March. The quick turnaround of investor sentiment can be attributed to four factors; the impact of the virus on the economy…
