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Commodities and the S&P 500 Diverged on April 11

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S&P 500’s performance 

The S&P 500 fell ~0.5% to 2,642.19 on April 11, 2018, due to geopolitical tension between the US and Russia about Syria. The expectations of a rise in US interests rates also pressured the S&P 500. Nine out of 11 major sectors in the S&P 500 fell on April 11, 2018.

The SPDR S&P 500 ETF (SPY) fell ~0.5% to $263.7 on April 11, 2018. SPY aims to track the performance of the S&P 500 Index.

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Sectoral performance 

The telecommunication services, financials, and healthcare sectors fell 1.4%, 1.2%, and 0.9%, respectively, on April 11, 2018. These sectors pressured SPY the most on April 11, 2018.

The energy sector, which accounts for ~5.8% of the S&P 500 Index, increased 1.0% on April 11, 2018. The Energy Select Sector SPDR ETF (XLE) rose ~1.0% to $70.64 on April 11, 2018. XLE represents the S&P 500 Index’s energy sector.

The sentiment in the commodity and equity markets could impact each other depending on the magnitude of the moves and various fundamental factors affecting each market.

Commodities

May 2018 WTI crude oil futures contracts rose 2% to $66.82 per barrel on April 11, 2018—the highest settlement since December 13, 2014. Prices rose as due to geopolitical tension in the Middle East. The United States Oil ETF (USO) rose ~1.5% to $13.45 on April 11, 2018. USO aims to track active WTI oil futures’ performance.

May 2018 US natural gas futures rose ~0.7% to $2.67 per MMBtu (million British thermal units) on April 11, 2018, due to cold weather forecasts. The United States Natural Gas ETF (UNG) rose 0.36% to $22.02 on April 11, 2018. UNG aims to track active natural gas futures.

The iShares S&P GSCI Commodity-Indexed Trust (GSG) rose 0.71% to $17.08 on April 11, 2018. GSG aims to track an index composed of a diversified group of commodities futures. The S&P 500 and commodities diverged on April 11, 2018.

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US Dollar Index 

The US Dollar Index fell ~0.02% to 89.56 on April 11, 2018. The Power Shares DB US Dollar Bullish ETF (UUP) fell ~0.09% to $23.49 on April 11, 2018. UUP aims to track the performance of the Deutsche Bank Long USD Currency Portfolio Index – Excess Return. The US Dollar Index and commodities, like crude oil and gold, are usually inversely related.

In this series 

In this series, we’ll discuss crude oil’s bearish and bullish drivers.

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