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COVID-19 and Stock Market Stress



April 3, 2020
Induced by the Coronavirus Disease 2019 (COVID-19) pandemic, the longest U.S. stock market bull run
of 11 years ended in mid-March, the quickest drawdown on record (Figure 1). The market subsequently
rebounded, responding to the $2 trillion coronavirus relief package (P.L. 116-136). The swing of stock
prices has created unprecedented volatility, a risk metric that measures the degree of price dispersion.
This Insight explains the function of the U.S. stock market, the different ways to view stock pricing, and
how certain pandemic-induced conditions could affect policymaking. The Securities and Exchange
Commission (SEC) is the primary regulator of U.S. capital markets.

                  Figure I. Quickest Drawdown for U.S. Stocks on Record


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    Source: ReSolve Asset Management.


The Stock Market Size and Importance
Stocks, also called equities, are shares of ownership in a public company. The U.S. stock market generally
refers to the market of public securities offerings that are listed on national securities exchanges. The
                                                             Congressional Research Service
                                                               https://crsreports.congress.gov
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