The Relative Influence of Macroeconomic Indicators on U.S. Stock Market Index Predictions
DOI:
https://doi.org/10.58445/rars.2694Keywords:
economics, stock market, index, macroeconomics, machine learning, AI, indicators, U.S.Abstract
This paper investigates the relative influence of certain macroeconomic indicators on specific U.S. stock market indices. Using multiple linear regression on U.S. stock and macroeconomic data from 1996 to 2025, the analysis compares absolute t-values to identify the strength at which each variable influences general and sector-specific U.S. stock market indices. It was originally posited that interest rates would have the highest relative influence. While interest rates had a significant influence in certain sectors, the analysis revealed that indicators such as retail sales, consumer sentiment, industrial production, and CPI had higher relative influence. Such results carry significant implications, as policymakers can better anticipate sectoral market responses to certain economic policies, and investors can track and interpret current trends in macroeconomic indicators to make predictions about future trends in the U.S. market. This research offers a more nuanced perspective to the current U.S. financial and economic landscape, challenging the assumed dominance of interest rates and emphasizing the impact of consumer-driven indicators across sectors.
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