Question

During this COVID-19 pandemic it is all over the new news that the stock market is crashing or it is reported that it is a “bear market” (prices are dropping for most stocks).

Explain using demand and supply why some stocks for airlines, cruise ships, and amusement parks/movie theatres are rapidly declining while others like online delivery (Amazon), electronic communication (like Zoom), and pharmaceuticals (drugs focused on fighting viruses) are increasing.

[Talk about the factors that shift the curves and use graphs to explain your analysis]

Answer 1

Due to lockdowns and travel restrictions all over the world the demand for the services from the  airlines, cruise ships, amusement parks, movie theatres etc. has decreased dramatically, decreasing profits of the company which makes investors pessimistic about the company, so, the stocks of these companies see decreased demand for their shares in stock market leading to decrease in their price.

But this lockdown has increased the demand for goods and services that can be used from the homeitself like, e-commerce, communication etc. this has increased their profitability which has increased investor confidence and this increased the demand for their stocks increasing their price in stock market.

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