Behavior of the US Financial Markets During the COVID-19 Crisis

The year 2020 saw numerous people across the whole world get infected with a virus never seen before, called COVID-19. The rapid spread of infections and the casualties from the disease forced the global economy to come to a standstill. Consequently economic agents behaved in ways to counter this and overcome the adversity. The government encouraged protection, security and management of hospitals and medical care centers at the same time finding ways to make sure financial and medical relief was being provided to its residents. The Federal Reserve provided liquidity by increasing its open market operations and cutting interest rates. Due to the interest rate cuts, and due to fear of contagion, bond yields dropped as investors sold stocks and resorted to purchase of government debt. Stock markets initially crashed, but regained as better medical management, treatment and vaccination options were found. As investors better understood how different companies were behaving and responding to the pandemic, different stocks behaved differently. Some such as technology and online retail stocks performed very well, while others such as traditional brick and mortar companies did not perform as well. The pandemic saw an advent of a new breed of companies that provided online support for meetings and networking as well as provided online tools for purchase of goods and services. Things slowly began coming back to normal when vaccines were discovered and people developed immunity against the disease due to these vaccinations. By the time all was said and done, the pandemic had left an indelible mark on the global economy.