Advances in Economics, Management and Political Sciences
- The Open Access Proceedings Series for Conferences
Proceedings of the 2nd International Conference on Financial Technology and Business Analysis
Series Vol. 50 , 01 December 2023
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Stock Market Returns under the Influence of Monetary Policy in the United State
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Abstract
In response to the phenomenon of overheated inflation after the Covid-19 pandemic, the Federal Reserve began to continuously carry out substantial interest rate increases, which has also caused financial markets to suffer heavy losses for a time. Consequently, the emphasis of this study lies in how monetary policy such as the effective federal funds rate and quantitative easing affect the monthly return of S&P 500 index. This paper collects monthly data between July 2004 and June 2023. This paper finds that the impact of effective federal funds rate on the stock market returns is insignificant. The fourth round of quantitative easing significantly affected the stock market returns, that with the quantitative easing the stock market rerurns increase by 2.786 percent. The inflation has a significant and consistent influence on stock market returns, which decreases by 0.4% for every 1% increase in the CPI index. Therefore, the volume of quantitative easing and the pace of asset purchases significantly affect stock market returns.
Keywords
stock market return, monetary policy instrument, quantitative easing, inflation
References
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Data Availability
The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
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- Volume Title
- Proceedings of the 2nd International Conference on Financial Technology and Business Analysis
- ISBN (Print)
- 978-1-83558-147-6
- ISBN (Online)
- 978-1-83558-148-3
- Published Date
- 01 December 2023
- Series
- Advances in Economics, Management and Political Sciences
- ISSN (Print)
- 2754-1169
- ISSN (Online)
- 2754-1177
- DOI
- 10.54254/2754-1169/50/20230572
- Copyright
- 01 December 2023
- Open Access
- This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited