ESTIMATING THE S & P 500 AND THE NASDAQ: VARIABLES THAT AFFECT EACH
Estimating the S & P 500 and the NASDAQ: Variables That Affect Each
Here in the United States our economy has experienced many different changes, which has resulted in various growths and recessions. Researchers have studied the ups and downs of the stock market and have attempted to predict what may come. However like the roll of the dice, predicting the stock market is a game of chance. We can look to the past in order to see which variables have influenced the market.
This paper examines a list of variables and their affect on the S & P 500 as well as the NASDAQ. The following is a list of variables we have chosen to test their affect on each of these indexes: Producer Price Index, all commodities, not seasonally adjusted; Consumer Price Index for all urban consumers, all items seasonally adjusted; Civilian Unemployment Rate, percentage seasonally adjusted; Balance of Payment Basis (trade balance, goods and services), millions of dollars seasonally adjusted; Federal Funds Rate, daily percentages; Currency in Circulation, billions of dollars, not seasonally adjusted; All Employees (finance, insurance, real estate), thousands, seasonally adjusted; M1 Money Stock, billions of dollars, seasonally adjusted; Inventories, millions of dollars, seasonally adjusted.
The two indexes selected for this paper are highly correlated. Due to their high correlation, the economic indicators listed above were placed in a spreadsheet and ran through various tests as well as a regression analysis. The S & P 500 is a list of the top 500 companies in the stock market and the NASDAQ is an index consisting mainly of technology firms. We have found that due to the recent demand for technology, the NASDAQ has played a significant role in the economy blending...