Is the stock market overreacting to coronavirus?

Trillions of dollars of value have been wiped out as the major stock market indices dropped amidst concern. Since fear took over the market on Feb. 20th, the S&P 500 had dropped around 13% by market close on Friday, Feb. 28 going into the weekend.There are two prevailing points of view on what this means for the market — the market is overreacting, and this is a serious event that could have long-term economic ramifications.

Markets hadn’t reacted much until Feb. 21 when reports emerged that the virus was not going to be easily contained. Now, this is shaping the narrative around markets in a big way, and two sides have emerged, a side that’s very concerned and another side that sees this as something that will be a speed bump to the global economy — and potentially an opportunity to buy stocks at a discount.

Story continuesSo far, the disease has proved to be much more like the flu than SARS in its deadliness, but that’s one of the reasons why it’s been able to travel the world so quickly. A V-bounce, where the market jumps back up after it falls down, is likely because people sold too much.

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