Stock Market Indexes (40% of the project grade).
Based on the course material presented in week 5.
In this part of the project, we will investigate three stock market indexes: S&P500, Dow Jones Industrial Average (DJIA), and NASDAQ Composite.
From the Yahoo! Finance home page:
Click on S&P 500 on the front page. The original graph shows the index for the current business day.
Change the view to the Full screen.
Using the Calendar change the dates from 01/03/2000 to the last available business day in 2022.
Using the +Comparison button above the graph, add DOW and NASDAQ to the graph to show the percentage change for each day relatively to the first day (01/03/2000), and the level of each index.
Write a report analyzing the results that you received. At a minimum, respond to all of the following:
What type of Indexes are the S&P 500, Dow Jones Industrial Average, and NASDAQ Composite?
What factors influence the performance of these indexes?
Is there a difference between the performances of S&P 500, DJIA, and NASDAQ composite over these twenty-two years? If so, explain the factors that contribute to those differences.
Using the forecast of economic conditions and trends, you found in part 1 of the project, what tendency of the levels and percentage changes of these indexes do you expect to see in the short-term and in the long-term?
Compare the movement of these stock market indexes to the yield curve’s level and spread that you evaluated in Stage 1 part 2 of the project. Can the yield curve level and spread be considered as a forecaster of future economic conditions, including recessions? You may want to incorporate more data for the yield curves to support your answer.
Will these findings change your decision to buy the bond you chose in part 1 of this project versus investing in stock market or in both? Explain your answer.
