Through the end of last year, the U.S. stock market had been in a record-breaking, ten-year period of growth. Goldman Sachs reported that the 10-year trailing return for the S&P 500 ranked in the 94th percentile of all recorded growth since 1880. In other words, the stock market hadn’t seen this kind of sustained growth since the 1800s. Then in February 2020, it all changed. From February 19 to March 23, driven by a combination of economic impact due to COVID-19 and an oil price war between Russia and OPEC, the stock market plummeted by more than 30%. Since then, the market has been wildly volatile.
Flurry has been studying app behavior extensively during the COVID-19 pandemic and recently released a report about the top U.S. app category winners and losers. Investment-related finance apps topped the charts by a wide margin. This got us thinking about the relationship between market volatility and the use of mobile investment apps —and that’s the topic of this report.
Flurry Analytics, a Verizon Media company, measures consumer behavior in over 1 million iOS and Android apps worldwide. For this analysis, we compared the last 6 months of usage trends in investment apps against stock market trading volume. Our hypothesis is that recent market turmoil caused by COVID-19 is driving increased usage in investment apps. We selected a basket of investment apps, found within the Finance category, that allow users to track the stock market, read financial news, and place trades. For trading volume we use the S&P 500, an index of 500 large companies listed on stock exchanges in the U.S., which is considered the best proxy for the U.S. stock market.
In the chart above, we display weekly sessions of investment apps in blue, and weekly trading volume in the S&P 500 in gray. The first thing you’ll notice is that app usage and trade volume appear to be strongly associated. We calculated a correlation coefficient of 0.83. So what does it mean if app usage and trade volume move up and down together? In short, the more volatile the markets are, the more people check financial news and make trades through their mobile apps.
Starting in February, as the stock market crashed, precipitating massive sell-offs, app sessions soared. During April and May, a confusing and volatile period, app sessions vacillated at elevated levels. Early June delivered another spike as Apple hit a record high and New York City began to re-open. And since that point, the market continued a steady upward trend, recovering almost entirely from the losses created by the February crash. Note that the S&P 500, like all indices, does not reflect all the details of the economy. With companies like Apple, Amazon, Microsoft, Facebook and Google, the S&P 500 is heavily weighted toward the technology sector, which has grown significantly during the pandemic.
As app developers continue to adapt their businesses in a post-coronavirus world, we’ll continue to monitor the Business, Finance, and Investment categories. Follow our blog as we share important trends related to mobile app usage and behavior.