The Impact of Interest Rates on Different Equity Market Segments

This paper aims to examine the impacts and sensitivities of various maturity segments of the U.S. treasury yield curve on the equity markets. We will examine the impacts looking first at the stock market as a whole and then looking further into each of the 11 GICS sectors which make up the S&P 500. The literature which inspired this study either looked solely at short-term interest rates or at foreign international markets, and so our paper will build upon this existing literature by investigating the relationship between interest rates and equity prices along various interest rate maturities while focusing on the U.S. market. Our findings support the literature of a statistically significant negative relationship between the rates and equities, and found that, of the 11 GICS sectors, 10 had a negative relationship with rates, with Energy being the sole outlier