After COVID-19 Epidemic Restriction: Investor Sentiment and Stock Market Response

Abstract

The economic situation and the direction of the stock market after the pandemic have become hot topics of concern for society. Despite numerous studies on the association between the stock market and investor sentiment, there is a dearth of consolidated and all-encompassing research on the subject in the context of the COVID-19 pandemic. Therefore, this article compiles pertinent information and literature on the stock markets of the United States and China amidst and following the pandemic. It delves into the connection and fundamental drivers between investor sentiment and stock returns, along with market crises, by scrutinizing and organizing the data. From the perspectives of stock returns and market crises, investor sentiment significantly affects long-term stock market returns and the occurrence of market crises by influencing investor behavior. Media orientation, herding behavior, and overreaction further explain the behavior and decisions of investors during this particular period, as well as the repercussions of these steps on the economy and the stock market need to be analyzed. These research findings contribute to a better understanding of market behavior for investors and regulatory agencies, enabling them to formulate strategies and measures to address market fluctuations and risks. The results underscore the noteworthy influence of investor sentiment on stock market returns and during market crises. Additionally, factors such as media influence, herding behavior, and overreaction shed light on the behavior and decisions of investors during this unique period.