Alina Khay

Alina Khay

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Alina Khay
Alina Khay
Stock Market Returns in Times of Interest Rate Volatility

Stock Market Returns in Times of Interest Rate Volatility

The tendency of volatility regimes to persist and the higher volatility regimes association with lower forward returns are particularly notable.

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Alina Khay
Jul 27, 2024
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Alina Khay
Alina Khay
Stock Market Returns in Times of Interest Rate Volatility
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The relationship between interest rate volatility and stock market performance has long intrigued economists and investors alike. The tendency of volatility regimes to persist and the higher volatility regimes association with lower forward returns are particularly notable. The main objective of this study is to examine how fluctuations in interest rates impact stock returns and their volatility, specifically within the context of the S&P 500 US equities. In this article I explore this relationship, utilizing empirical data and regression and GARCH analysis to uncover the nuances of this dynamic interaction.

Importance of the Study

The timing of this study is particularly pertinent given the current anticipation that the Federal Reserve may soon cut interest rates. Such a move is expected to have broad implications for the economy and financial markets, influencing everything from borrowing costs to investor sentiment. At the most basic level, volatility matters to investors because it …

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