Analyzing the Interplay between US Real GDP Growth and S&P 500 Sectoral Capitalization Trends

Abstract

The relationship between macroeconomic indicators and financial market movements has been a subject of extensive research, particularly focusing on how Gross Domestic Product (GDP) growth influences stock market behavior. This study explores the interaction between the United States' Real GDP growth and the capitalization trends of different sectors within the S&P 500 index, aiming to uncover whether sectoral performance correlates with economic output. By examining historical data over the past few decades, this research investigates the degree of sensitivity of various sectors to changes in real GDP growth. The findings indicate that some sectors exhibit stronger ties to economic growth, while others show weaker correlations. This study provides a comprehensive analysis of how economic growth translates to sector-specific movements in the stock market, offering insights for investors and policymakers interested in understanding market dynamics in relation to economic health.