This article analyzes how macroeconomic fundamentals and high price-earnings ratios on stocks will affect long-run returns. The first section reviews the stock market's recent performance and describes how investors and analysts have reacted to this performance. The second section shows how...

The performance of stock prices during breaks in trading has received considerable attention in recent years. While some studies focus on performance surrounding periods of unscheduled trading breaks (trading halts in individual stocks, circuit breakers for exchanges), other studies look at...

The record number of fifty-point daily moves in the Dow Jones Industrial Average in 1996--forty-five in the first three quarters alone--has attracted considerable media attention. An analysis traces this phenomenon to two basic causes: the record level of the Dow and the return of price...

The price of equity has soared during the past five years, stoking concerns that stocks' prices might have risen too far, too fast. These concerns became more pressing as the values of equities rose much more rapidly than earnings during 1998 and early 1999, lifting stocks' prices to record...

This paper analyzes the impact of unanticipated changes in the federal funds rate target on equity prices, with the aim of both estimating the size of the typical reaction and understanding the reasons for the market's response. We find that over the June 1989-December 2002 sample period, a...

The authors model stock returns as a stochastic function of a constant expected return and the financing costs resulting from delayed delivery, to examine three potential sources of instability in stock-return model parameter estimates.

This Commentary makes a case for Fed action in the event of a stock market bubble. Because stock market prices serve as a signal to business managers to invest, bubbles can mislead managers into investing when it is not profitable. The overinvestment, which becomes apparent after the bubble...