Market Update: April 14, 2020


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The Markets

Why is the stock market doing so well when the COVID-19 pandemic has yet to peak?

At the end of last week, the Centers for Disease Control and Prevention reported the United States remains in the acceleration phase of the coronavirus pandemic. This phase ends when new cases of COVID-19 level off. The next phase should be a period of deceleration, and the number of cases should decline.

There are several different models estimating when a peak may occur, and estimates vary from state to state, according to Sean McMinn of NPR. For instance, the model cited by the White House is from The Institute for Health Metrics and Evaluation at the University of Washington. It assumes social distancing measures will stay in place through the end of May. In this circumstance:

  • New York may have peaked April 9
  • California may peak April 15
  • Pennsylvania on April 17
  • Texas on April 28
  • North Dakota on April 30
  • Wyoming on May 2

All other states have peaked or are projected to peak on or before May 2, 2020.

Despite estimates suggesting the virus will continue to spread and businesses may not reopen fully until the end of May, U.S. stock markets moved significantly higher last week. Al Root of Barron’s reported:

“The S&P 500 index rose 12 percent…its best week since 1974 – and finished 25 percent off its March low. The corresponding gain for the Dow Jones Industrial Average was 13 percent, up 27.8 percent from its low. The Nasdaq Composite jumped 10.6 percent, raising it 23 percent off its low.”

Many factors affect U.S. stock market performance, including company fundamentals (how companies perform), investor sentiment (what investors think), consumer sentiment (what consumers think), monetary policy (what the Federal Reserve does), and fiscal policy (what the federal government does). The driver supporting stock market performance last week was Federal Reserve monetary policy. Axios explained:

“The Federal Reserve announced Thursday it will support the coronavirus-hit economy with up to $2.3 trillion in loans to businesses, state and city governments…The slew of new Fed programs comes as economic conditions deteriorate at an unprecedented pace…and another 6.6 million Americans filed for unemployment benefits this week.”

There continues to be uncertainty about how the U.S. economy will recover. As a result, we are likely to see markets remain volatile.


Should you listen to music when you work?

Do you like to listen to music when you work?


Pose this question at a party, and you’ll probably get some polarizing responses. Some will say they love it, claiming that it improves their performance; others will say they find it distracting and cannot work effectively with music playing in the background.

As music enthusiasts and psychologists, we wanted to understand when it helps and when it hurts to listen to music while performing tasks.

Interestingly enough, our research has found that both of these perspectives can be true. It just depends on what sort of work you’re doing.

Developing a broader framework

Researchers have examined how music influences performance on a variety of tasks, from athletics to mathematics to reading. They’ve also looked at whether music affects performance through factors like the listener’s mood or their working memory capacity.

However, much of this research focuses on specific contexts or specific types of tasks. We wanted to develop a more comprehensive framework that can be applied more broadly.

So in a recent study, we brought participants into our lab to perform a variety of tasks. They included an easy task – searching through word lists and crossing out words containing the letter “a” – and a more difficult task – memorizing word pairs and recalling the partner to each word. Some participants completed all of the tasks in silence, whereas others completed the tasks with instrumental music that was either loud or soft, and either simple or complex, the latter meaning music with more instrumental tracks.

A simple music track might include one or two instruments, its melody might not change very frequently, and it may have a slower tempo. Complex music, however, might include a large variety of instruments, might have frequently changing melodies, and would typically have a faster tempo.

The type of task matters

Several key findings emerged from our study.

We found that participants who listened to simple music or no music performed about the same on the easy task. However, participants who listened to complex music performed best on the easy task.

Conversely, participants performed worse on the more difficult task when they listened to any music, regardless of complexity or volume, compared to those who didn’t listen to any music.

What should we make of these findings?

We suggest that people have limited mental resources from which both music and tasks can draw.

We can become bored and our minds may wander when these resources are underutilized. But we also can become overstimulated and distracted when these resources are overwhelmed.

Not surprisingly, we typically need to use fewer of our mental resources when we perform easy tasks, whereas demanding tasks require more brainpower. However, because we might be less engaged during easier tasks, there’s a greater risk of drifting off. Music might give us the extra boost we need to plow through the monotony. However, difficult tasks already demand a lot of our resources. Listening to music can become overkill.

So optimal performance should occur when we strike a “sweet spot,” which may depend on the type of music and the type of task.

The personality factor

Our research findings suggest that the effects of music may also depend on our personalities. In the same study, we examined participants’ preferences for external stimulation.

Some people have what is called “preferences for external stimulation.” This means that they tend to seek out – and pay greater attention to – things that are going on in their surroundings, such as sights or sounds.

Music, then, might suck up more mental resources from people with strong preferences for external stimulation, meaning a more delicate balance may need to be struck for these types of people when they listen to music during tasks.

Supporting this rationale, we found that complex music tended to impair even performance on easier tasks in people with strong preferences for stimulation. Likewise, we found that any music hindered complex task performance when people had strong preferences for external stimulation.

So, in short: It can be helpful to put on some music when you work on something that you find relatively straightforward and repetitive. One of us, for example, blasts heavy metal when running basic data analyses. The other of us love to listen to blues music when reading through his email.

However, music can hurt when a task comes along that requires your full attention, so it’s probably best to turn off Iron Maiden or B.B. King when it’s time to write that paper.

And it probably goes without saying that what works best for you might not work for the person working next to you – so make sure to plug in those headphones.