7 Aug

Are Broader Markets Ignoring Oil’s Moves?

WRITTEN BY Rabindra Samanta

US equity indexes

On July 27–August 3, 2017, the S&P 400 Mid-Cap Index (IVOO) fell 1.3%—the most among our list of major equity indexes. It had the highest negative correlation of 69.7% with US crude oil active futures among major US equity indexes. Oil and gas companies account for 3%–4% of the equity index.

Are Broader Markets Ignoring Oil’s Moves?

The Dow Jones Industrial Average Index (DIA) was the outperformer among our list of equity indexes. It had the least negative correlation of 7.1% with US crude oil active futures on July 27–August 3, 2017. During this period, the S&P 500 Index (SPY) was slightly in the red. SPY had a correlation of -42.4% with US crude oil active futures. Both of these equity indexes have allocations of 6%–7% to the energy sector.

European equity indexes such as the FTSE 100 Index (EWU) and the CAC 40 Index (EWQ) had negative correlations of 87% and 97% with US crude oil futures in the week ending August 3, 2017. During this period, the FTSE 100 Index rose 0.4%, while the CAC 40 Index fell 1.1%—despite both of the indexes having over 10% exposure to energy companies.

Sector-wise analysis

The Energy Select Sector SPDR ETF (XLE) fell 1.7%. XLE was the third-largest loser among the SPDR sector-based ETFs in the last five trading sessions. The Utilities Select Sector SPDR Fund (XLU) rose 1.7% and was the largest gainer. The SPDR S&P Telecom ETF (XTL) fell 2% and was the largest loser among the sector-based SPDR ETFs.

Latest articles

Wall Street has an average target price of $77.62 on Shake Shack stock, which implies a potential upside of 22.6% based on its closing price on Tuesday.

According to CNBC, a UBS survey of high-net-worth individuals has found that more than half of the respondents foresee a market crash next year.

In today’s Get Real, we saw President Trump's concerns about vaping, the reception of the Disney+ launch, tension in the EV world, and more.

The biggest utility stock by market capitalization, NextEra, has soared almost 30% year-to-date, while the third-biggest, Dominion, has risen only 11%.

Marvell Technology (MRVL) stock rose around 4.16% on November 12 after the chip maker inked a deal with Microsoft (MSFT).

Southern Company (SO), the top regulated utility, declared a quarterly dividend of $0.62 per share last month. The ex-date for the dividends is Friday.