Online Trading Platforms Down As Pandemic Ends

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Online Trading Platforms Down As Pandemic Ends

Online Trading Platforms Down As Pandemic Ends

What is causing the downturn of the stock market in 2022 is not well known but it is believed the primary reason could be the end of the coronavirus pandemic. Several online trading platforms are witnessing lower trade volume since January.

The S&P 500 Index lately dipped 7 percent and the major factors responsible include high inflation, the Russia-Ukraine war and long upward climb that overvalued stocks.

The inflation is around 7 percent per annum now and it has galloped the prices in the stock market. It is assumed a significant amount of money would be moved out as the Fed is raising the interest rates and simultaneously investors are looking for higher returns in bonds.

Moreover, the past two years witnessed an upward climb in the market that led to the overvaluation of many stocks. It is not to note a popular saying here that trees cannot grow through the stratosphere. The stocks, therefore, sidestepped a bear market and it was a greater drop since 2008. The drop is about 20 percent.

Lately, over a period of the past couple of weeks, the threat of the Russia-Ukraine war was severely high and the invasion of Russia has left the market on edge.

The gradual track of the stock market to normal featured both winners and losers amid the rise and fall phases of the pandemic. During the initial crisis of the COVID-19, the market saw a surge. Similarly, the market was up when the second variant Delta invaded between June and August 2021. The Omicron in November 2021 led to the upswing. Two significant downturns were between January and June in 2021, and between September and October in 2021.

The FAANG stocks that include Facebook, which is now Meta, Apple, Amazon, Netflix and Google (Alphabet) along with Tesla and Microsoft were surprisingly on the rise with the increase in the COVID-19 case numbers in 2020. These did witness upswing again in 2021 but to a lesser degree.

The sectors that performed notably well were informational technology, consumer discretionary and materials. These mainly benefited from the structural growth trends. The pandemic forced people to stay home and embrace digitization and technology more.

The sectors that witnessed fall during the pandemic include real estate, energy and financials. The stocks of companies like ConocoPhillips, Chevron and ExxonMobil performed poorly. These improved when the pandemic cases were reduced.

It is not yet clearly known which factor is more responsible for the downturn of the stock market that reduced online trading. Hope the market may improve with the end of the Russia-Ukraine war or when the inflation is lowered.

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