I have been day trading since 2019 and at the beginning of 2020, I noticed significant increases in volume and volatility in the US stock markets. First I thought that this could be due to people having more free time during the lockdowns and more people got into day trading, but when volume increased almost exponentially at the beginning of 2021, I knew that there were something bigger operators behind the fastest stock market recovery in the US history. That was also the main reason why I chose this topic to the theme of my thesis.

In my thesis, my goal was to learn more about central banking, major US stock market indices, US stock markets in general and most importantly, how the US central bank Federal Reserve System has affected them during COVID-19 pandemic, or has it affected at all. All of my data come from books, articles, news and reports from various financial websites, such as Corporate Finance Institute and Federal Reserve System official page.

According to the result what I found during my research, there was significant probability to the correlation between increased Federal Reserve Total Assets and unprecedentedly fast recovery from the recession. Because this was the first time when quantitative easing has been used in such a massive scale, there is no real-world example about long-term effects on the economy or stock market growth in the future. In conclusion I experimented scenarios about future of central banking and how stock markets could develop in the future, if this scale of quantitative easing becomes new normal.