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The coronavirus outbreak jolted the stock markets around the world to an extent not seen since the Great Depression.
The resulting volatility, both in terms of price changes and spikes in trading volume was historic. The resulting change in price and volume was more or less inverse, meaning as the prices tumbled, trading volumes skyrocketed, as evidenced by the above two graphs.
Highlights...
1. The weekly price graph shows that the Dow Jones average peaked during the week of 2/5, hitting a weekly high of 29,276, although the daily intraday high of 29,569 occurred only on 2/12. This deviation between the daily and weekly occurs due to the averaging of the weekly prices. During this time period, the outbreak was still an epidemic, confined primarily in one central province in China.
2. The week of 3/18 saw the fastest collapse in Dow Jones history, as well as in other broader market averages. The weekly average swooned to 20,705, though the intraday low of 18,214 occurred on 2/23, on the heels of the talks of a wide range of restrictions from the CDC and White House.
3. After having hit the low, the market quickly turned around. Initially, it was a V-shaped recovery, with the market shooting up nearly 5,000 points in a mere three weeks. During the week of 4/8, the Dow Jones average made a meteoric rise to 23,950 (with an intraday high of 24,009 on 4/9). This recovery was on the back of a historic stimulus package to help consumers and businesses tide over an anticipated lockdown to arrest the spread of the outbreak.
4. Though the recovery of the stock market has continued through the last trading week in May, the slope of the Dow Jones average has flattened to a U-shape from the prior V-shape. Since then the average has regained another 1,800 points, settling at 25,400 on 5/28, with the intraday high reaching 25,759. This rise occurred following the taper of the outbreak in New York City, which was the epicenter of the US outbreak for over six weeks, destroying nearly 3,000 lives thus far.
5. The bottom graph shows the Dow Jones' weekly trading volumes. During the week of 3/18, when the average made a 4-year low, the volume spiked to 4.1B, which was three times higher than the normal weekly average. The two graphs show the perfect inverse relationship between the week average value and the trading volume. Then, as the average started to recover, the volume waned, falling back to the normal 1B level again.
Stay safe!
Data Sources:
-Sid som
homequant@gmail.com
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