Economics Homework Help

Stock Index Case

Instructions-

Go to the Bureau of Economic Analysis web page (bea.gov). Click on Tools and then Interactive Data in the. Under National Data click on GDP & Personal Income (National Data). Next click on Begin Using the Data. Under Section I click on Table 1.1.1 Percent change from the preceding period in Real Gross Domestic Product. The data you have are quarterly annualized growth rates for the economy over the last few years. Print this information.

Now go to Yahoo.com and click on Finance along the top. In the Search box on the top type ^GSPC(the symbol for the Standard and Poor’s 500 stock index) then Go. Under the Historical Data, filter the Historical Prices, Monthly, and change the start date in the time period to 01/01/2019. Click Apply then download the data. You will now have the monthly values for the S&P 500 Index for the last 9 quarters.

Look at your GDP data gathered earlier. Note the quarter for your latest value (I, II, III, or IV). Quarter I ends in March, II ends in June, III ends in September, and IV ends in December. Select the S&P open index values for the beginning months of the quarters corresponding to the GDP quarters. For example, if the last GDP value is for 2021 QI, the S&P value should be the open value for April 1, 2021. Select the latest 9 end-of-quarter values for the

S&P index.

Now calculate the quarter-to-quarter percentage changes in the S&P index (you will have 10 values), then annualize each by multiplying by 4. These values are quarterly annualized growth rates for the stock market (as measured by the S&P index anyway) over the last few years. Include the results along with the GDP growth rates in your report.

Question-

1.) Analyze the data and draw conclusions about the relationship between the stock market and the performance of the economy.