Abstract
Financial Markets, considered as backbone of a capitalist economy, when under pressure exogenously, is a cause of concern for both domestic and foreign investors, triggering various false alarms. When investors lose confidence in its structure, panic buying and selling kicks in, amplifying uncertainty into real economy. The stock markets of US, which has undergone one of the finest sophistications in history, witnessed the most horrific volatility due to COVID-19 pandemic, signifying a chaos created by the microscopic virus in financial world. Towards establishing the magnitude of panic sell off effect in stock markets, this paper uses formal event study analysis technique. In this study we examine the aftermath of first locally transmitted COVID-19 case in US, on Dow 30 and its constituent units, representing a unique industry. The empirical results indicate significantly negative cumulative abnormal returns, measuring magnitude of “blood-bath” on The Wall Street.
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