ATLANTA — ATLANTA – The stock market is looking better with word that there is progress on a possible treatment for COVID-19, but the damage the virus has already done to the market is severe.
The coronavirus has introduced us to an era of uncertainty and the stock market reflects that.
“It makes it very difficult to plan and coordinate your life, which causes people to be less interested in buying stocks,” says Tom Smith, Associate Professor at Emory’s Goizueta Business School.
The coronavirus has forced us to change our spending habits and businesses have suffered.
Investors buy stock when they’re confident of a company’s future. When there are layoffs and furloughs, those investors will start selling.
“When more people want to get rid of a stock than buy a stock, then the price starts getting driven down,” says Smith. “You might start selling stock because others are selling their stock, which pushes the price down even further.”
Smith says the coronavirus has made it difficult for investors to see when the economy will begin to rebound.
“The truth is, if they don’t know what’s going to happen next, they think the sky is falling,” says Smith.
It will take time for the economy to recover once the pandemic is over, so it will take time for the market to fully recover. When that will all happen is part of the uncertainty the country now faces.