Does the Fed Impact Stock Prices?

https://joi.pm-research.com/content/28/1/55

Posted: 5 Oct 2017

See all articles by Michael McDonald

Michael McDonald

Fairfield University - Charles F. Dolan School of Business

Michael Puleo

Fairfield University - Charles F. Dolan School of Business

Hedieh Shadmani

Fairfield University - Charles F. Dolan School of Business

Date Written: October 4, 2017

Abstract

The influence of the Fed’s actions on equity prices has been a source of significant speculation in recent years. This paper uses a well-regarded measure for the “fair” value of interest rates to measure the degree to which the Fed is influencing interest rates, and then relates that level of interference to equity returns. We find that Fed’s actions are correlated with a modest negative impact on US equity prices – that is Fed interference has a slight negative relationship with broader equity returns. In contrast, outside the US, Central Bank interference generally has a stronger positive relationship to equity returns.

Suggested Citation

McDonald, Michael and Puleo, Michael and Shadmani, Hedieh, Does the Fed Impact Stock Prices? (October 4, 2017). https://joi.pm-research.com/content/28/1/55. Available at SSRN: https://ssrn.com/abstract=3047802 or http://dx.doi.org/10.2139/ssrn.3047802

Michael McDonald (Contact Author)

Fairfield University - Charles F. Dolan School of Business ( email )

N. Benson Road
Fairfield, CT 06824
United States

Michael Puleo

Fairfield University - Charles F. Dolan School of Business ( email )

N. Benson Road
Fairfield, CT 06824
United States

Hedieh Shadmani

Fairfield University - Charles F. Dolan School of Business ( email )

N. Benson Road
Fairfield, CT 06824
United States

Register to save articles to
your library

Register

Paper statistics

Abstract Views
370
PlumX Metrics