Stock Market Response to FOMC Announcements: Evidence from Firm-Level Analysis

Zhen Ling, Carey Business School, Johns Hopkins University, Washington DC, 20001, USA
Rui Wen, Business School, University of New South Wales, Sydney, 2052, Australia
Yisen Wang, handong Experimental High School, Jinan, 250001, China
Volume10 nos.1 August 2025 ISSN 2755-3272

Keywords

Event study method; FOMC announcement drift; EMH (efficient market hypothesis).

Abstract

This study examines firm-level stock market responses to Federal Open Market Committee (FOMC) announcements using event study methodology and panel regression on U.S.-listed stocks. The study calculates cumulative abnormal returns (CARs) around announcement dates and examines their relationship with firm characteristics. The results show that stock prices respond both immediately and with a delay to monetary policy news. Moreover, the research finds that small-cap and high-volatility firms exhibit stronger reactions to market changes. It suggests the deviation from the efficient market hypothesis and the heterogeneity in market responses. These findings highlight the role of firm-specific factors in shaping stock return dynamics around macroeconomic events.