Research / BFI Working PaperJun 16, 2021

Stock Prices and Economic Activity in the Time of Coronavirus

Steven J. Davis, Dingqian Liu, Xuguang Simon Sheng

Stock prices and workplace mobility trace out striking clockwise paths in daily data from mid-February to late May 2020. Global stock prices fell 30 percent from 17 February to 12 March, before mobility declined. Over the next 11 days, stocks fell another 10 percentage points as mobility dropped 40 percent. From 23 March to 9 April, stocks recovered half their losses and mobility fell further. From 9 April to late May, both stocks and mobility rose modestly. This dynamic plays out across the 35 countries in our sample, with notable departures in China, South Korea, and Taiwan. The size of the global stock market crash in reaction to the pandemic is many times larger than a standard asset-pricing model implies. Looking more closely at the world’s two largest economies, the pandemic had greater effects on stock market levels and volatilities in the U.S. than in China even before it became evident that early U.S. containment efforts would flounder. Newspaper-based narrative evidence confirms the dominant – and historically unprecedented – role of pandemic-related developments in the stock market behavior of both countries.

Additional Materials

More Research From These Scholars

BFI Working Paper Nov 8, 2022

Investment and Subjective Uncertainty

Nicholas Bloom, Steven J. Davis, Lucia Foster, Scott Ohlmacher, Itay Saporta-Eksten
Topics:  Industrial Organization
BFI Working Paper Sep 18, 2020

60 Million Fewer Commuting Hours Per Day: How Americans Use Time Saved by Working from Home

Jose Maria Barrero, Nick Bloom, Steven J. Davis
Topics:  Employment & Wages, COVID-19
BFI Working Paper Jun 21, 2022

The Shift to Remote Work Lessens Wage-Growth Pressures

Jose Maria Barrero, Nicholas Bloom, Steven J. Davis, Brent Meyer, Emil Mihaylov
Topics:  Employment & Wages