The Impact of Federal Reserve Interest Rate Changes on U.S. Stock Market Returns

Jinghao Weng

Co-Presenters: Individual Presentation

College: College of Business and Public Management

Major: BS.FINANCE

Faculty Research Mentor: Yu, Huaibing  

Abstract:

Title:How Do Federal Reserve Interest Rate Changes Affect the U.S. Stock Market?Research Topic and Question:This project will study the relationship between Federal Reserve interest rate changes and stock market performance. The main question is: Do stock prices increase or decrease after the Fed raises or lowers interest rates?Purpose of the Study:Interest rates are one of the most important tools in monetary policy. When the Fed changes rates, investors often react quickly. This research will analyze whether rate hikes lead to negative stock returns and whether rate cuts lead to positive returns. The goal is to understand how sensitive the stock market is to monetary policy changes.Data and Method:I will collect historical federal funds rate data from the FRED database and stock market data (such as the S&P 500 index) from Yahoo Finance. The sample period will cover around 15 years. I plan to compare stock returns before and after rate announcement dates. Basic regression analysis may also be used to test the relationship between interest rate changes and market returns.Expected Outcome:This study may help explain how monetary policy decisions influence investor behavior and stock price movements.