Research on the impact of the COVID-19 in service industry in U.S. stock market based on the Fama French Five Factor Model

Authors

  • Ling Jin

DOI:

https://doi.org/10.54691/bcpbm.v27i.1959

Keywords:

Keywords: Fama-French model, U.S stock market, COVID-19, Service industry.

Abstract

Since the outbreak, the U.S. economy has experienced a great recession, in which the service sector has been hit hard, while it accounts for a large share of U.S. GDP, and twists and turns have hit the stock market. Based on the Fama-French five factor model, this paper conducted a regression analysis and coefficients comparison on the data of 26 months before and after the epidemic, with March 2020 as the node. The results show that the market rebounds quickly under the federal government's intervention and shows a state of continuous growth. However, the investors tended to make the overall investment style of the market more speculative. Investors no favor the value stocks with stable earnings but relatively slow growth. The book-to-market ratio, an important indicator, has less influence on overall investors, and companies with poor profitability have become the targets for speculators to bet on. It is worth noting that when the trend of the stock market is not consistent with the real economic conditions, investors must remain vigilant and cannot ignore the impact of the epidemic on the economy and enterprises because of the prosperity of the stock market.

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Published

2022-09-06

How to Cite

Jin, L. (2022). Research on the impact of the COVID-19 in service industry in U.S. stock market based on the Fama French Five Factor Model. BCP Business & Management, 27, 142-153. https://doi.org/10.54691/bcpbm.v27i.1959