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How does the Consumer Sentiment Index shape Market Performance? A Comparative Analysis across Heterogeneity in the USA over Time

Snykers, Guillaume ; Crismer, Jonathan
(2023)

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SNYKERS_60722000CRISMER_14382000_2023.pdf
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Details

Supervisors
Iania, Leonardo
Faculty
Louvain School of Management
Louvain School of Management
Degree label
Master [120] : ingénieur de gestion, à finalité spécialisée
Master [120] en sciences de gestion, à finalité spécialisée
Abstract
We examine the influence of consumer sentiment on the stock returns in the US. We propose a look at the impact that specific characteristics of consumers could have on the relationship. And finally, we describe the effect of the 2000 crisis on this phenomenon. By using the Consumer Sentiment Index from the University of Michigan, we reveal a positive as well as a negative relationship between the CSI and the stock returns of the S&P 500 according to the studied periods. These results show a more instant impact and also its influence on the longer-run. Moreover, consumer heterogeneity was revealed to be a key element in the explanation of stock returns fluctuations, considering that specific attributes proved to be more influential than others. This heterogeneity is expounded by cultural differences inside the USA with different genders, age, education levels, income and regions. Also, we find evidence that economic downturns strengthen this relationship more especially when the consumer confidence is overoptimistic.