FOMC Meeting Effects on the Sectors of the S&P 500
Open Access
Author:
Popivchak, Rachel Elizabeth
Area of Honors:
Finance
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
Professor Christoph Hinkelmann, Thesis Supervisor Dr. Brian Spangler Davis, Thesis Honors Advisor
Keywords:
Federal Reserve S&P 500
Abstract:
The Federal Open Market Committee, an essential part of the Federal Reserve, meets annually during eight regularly scheduled meetings. During these meetings, important decisions are made regarding monetary policy. Prior to 1994, the Federal Reserve did not release information to the public regarding the decisions made during these FOMC meetings. However, after 1994 statements were released to the public providing them with a summary of the meetings and decisions that were made. Since 1994, significant and abnormal returns have been observed during meeting periods in the S&P 500.
This paper will aim to examine how these abnormal returns affect the ten different sectors of the S&P 500: Consumer Discretionary, Consumer Staples, Energy, Financials, Health Care, Industrials, Information Technology, Materials, Telecommunication Services, and Utilities over three different return periods. After running statistical significance tests, it was determined that the Financials Sector experiences the highest returns during these FOMC meeting periods at almost 1%. Certain sectors of the S&P 500 are significantly affected by the FOMC meeting periods, while others that were expected to be were not.
