There is an on-going debate about just how much the Federal Reserve quantitative easing (QE) policy has influenced the rise in stock market prices. From January 2009 until April 2013, I estimate it is almost 100%.
In the example above, the stock market return over the time period is compared to a hypothetical 4.52% perpetual bond which has an investment grade of BAA1. The BAA1 interest rate was chosen as a proxy for the relative risk of the highly liquid U.S. stock market. In January of 2009, the bond would have been priced at an interest rate of approximately 8.14%, giving it a market traded price of $55.53. At the end of April 2013, with BAA1 rates at 4.52%, the bond would be trading at par value.