Anthony Nguyen

U.S. Stocks Slide Into a Correction as Virus Gears Show No Sign of Easing Analysis

https://www.wsj.com/articles/global-stocks-extend-declines-as-coronavirus-concerns-mount-11582784087

Published on Feb 27, 2020 7:22 pm ET

Credit for information used goes towards the New York Times and its publishers

The coronavirus has been an international issue in the past couple of weeks and to say that the virus has gotten many people scared would be an understatement. What makes this topic fascinating is the fact that the way people are responding to this virus seems to be different than how people had responded to other big diseases of the past.

                Although it can be considered very loosely related, the coronavirus and stocks are somewhat similar to Chapter 9 as it talks about product management and new-product development. Although not specifically stated in the New York Times’ article on the coronavirus, it has been stated by many news websites that many companies are either slowing down or halting production of their products because of the coronavirus fears while some companies are outright cancelling events that they had previously planned.

                The way this relates to Chapter 9 in a bigger sense is that, as the article stated, stocks seem to  be declining into the “correction territory” because of the coronavirus fear that has been spreading. This decline means that there are less investments within the stock market, which also means that companies are not receiving the funds they need in order to create new products. By not receiving more funding, companies have to slow down production, which means there will be less sales and less profit to be made. Usually the market also like to innovate in order to attract new customers, but because of less funding, as stated before, which means that maybe research isn’t funded as much and has to slow down. Another thing to consider is that if one market slows down, it might also slow down other markets as well.

                On the other side, maybe because there isn’t enough funding and a desperate desire to increase profit, some companies might rush out their product and decrease their products life cycle because the product in question isn’t well made or defective. Maybe during this time, people might also change their minds about what they like because their state of mind has changed, which creates a new sense of what’s fashionable or desirable, which means companies have to find ways to go towards to what the market is now demanding.

                As a psychological factor, as stated in the article, “Investors have grown increasingly pessimistic that efforts to stop the spread of the virus will prevent significant damage to the global economy.” (Langley, Ostroff, Koh, New York Times). To summarize the whole article in one sentence, the problem with the American economy right now is that stocks have been declining rapidly because the fear of the coronavirus is spreading and many companies are suffering because of this and other countries might soon be affected by these changes in stocks also.