The Impact of COVID-19 on the Stock Market-- Taking Chinas and the United States Stock Markets as Examples

Abstract

As COVID-19 spreads over the world, the economy has suffered greatly since the Great Depression of the early twentieth century. The outbreak has a significant negative influence on financial markets in China and the United States, the world's two largest economies. This study addresses the influence of COVID-19 on the stock market in China and the United States, and investigates the impact on emerging stock markets in China and the United States using weekly closing prices from June 1st, 2018 to June 30th, 2022. The paper also conducts an empirical investigation of the influence of COVID-19 on the stock market using the Augmented Dickey-Fuller Test, Moving Average model, and GARCH model, and then focuses on policy variations between two countries. According to the data, the COVID-19 epidemic has had a considerable detrimental influence on stock markets and volatility in both countries. According to the research, the United States' stock market is more likely to be affected by COVID-19 than that of China, and the volatility of stock market indexes is higher in the United States during the most dangerous period of the pandemic. When compared to the United States, China had a faster response and recovery rate when COVID-19 first surfaced, but as the pandemic normalizes, China had a higher volatility rate.