Impact of Inflation, Interest Rates, and Unemployment on us Stock Market Returns

This study performs econometric approaches to investigate the effects of inflation, interest rates, and unemployment rates on U.S. stock market returns from January 2000 to June 2024. According to the research, nominal earnings of stocks increase, and corporations can pass on greater costs to customers, which suggests that equities could act as a hedge against inflation. Interest rates indicate higher borrowing costs for businesses and lower profitability, which is expected to negatively impact stock returns. Nonetheless, there is an unexpectedly strong positive link between unemployment rates and stock market performance. The study provides investors and policymakers with crucial new information, considering the intricacy of the relationships between different macroeconomic conditions and stock market performance. It emphasizes the significance of considering outside variables, such as changes in policy, which could affect anticipated economic linkages. Based on sector-specific effects and comparative evaluations in other economies, further study could build upon these findings.