TONE, TIMING, AND TURMOIL: HOW FOMC STATEMENTS AFFECTED THE STOCK MARKET DURING THE COVID-19 PANDEMIC

Danny Jang

Abstract


This study examines how the Federal Open Market Committee (FOMC) statement tone influenced short-term stock price movements during the COVID-19 pandemic. Prior research suggests that hawkish or dovish language can drive market reactions, but this study uses manual sentiment analysis and an event window approach to evaluate tone more precisely. Results show dovish tones aligned with positive stock changes in stable periods, while hawkish tones correlated with market declines. However, during the height of the pandemic, tone effects were less predictable, suggesting that crisis conditions can mute or override typical tone-based impacts.

 

JEL: E52, G14, E58

 

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Keywords


Federal Reserve, FOMC (Federal Open Market Committee), monetary policy, COVID-19 pandemic, sentiment analysis, event study, stock price reaction

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References


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DOI: http://dx.doi.org/10.46827/ejefr.v9i2.1969

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