Effect of U.S. Federal Budget on S&P 500 Index

  • Diogo Paraíso Guerreiro Rosa do Nascimento (Student)

Student thesis: Master's Thesis


I propose in this paper to understand and explain how the publication and acceptance of the United States federal budget affects the stock market returns of the largest 500 U.S. companies by market capitalization. It is analyzed the impact of each category of expenditure from the U.S. budget in stock market returns. Further, it was also tested if presidential elections years had any effect on stock prices. It is represented in this study the 2002 to 2012 U.S. budget publications and 10 sectors indexes from the S&P 500 index. I verified that the President’s budget publication does not lead to any significant return to the S&P 500 index, but leads to a positive and significant return on the Consumer Discretionary and Materials sectors and negative and significant return to the Technology sector. The budget acceptance and the presidential elections years had no significant effect in stock market returns in this study. The way how U.S. government spends its money in the U.S. federal budget is represented in each category’s expenditures of the budget, which does not affect any sector of the U.S. economy.
Date of Award24 Apr 2015
Original languageEnglish
Awarding Institution
  • Universidade Católica Portuguesa
SupervisorDiana Bonfim (Supervisor)


  • Mestrado em Gestão

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