Did Oil’s Fall Impact the S&P 500 Index?

US equity indexes

On August 3–10, US equity indexes reported small declines. Last week, the Dow Jones Industrial Average (DIA) fell 0.6%, while the S&P 500 Index (SPY) and the S&P Mid-Cap 400 ETF (IVOO) each fell 0.2%.

Did Oil’s Fall Impact the S&P 500 Index?

About 5.5%, 6.3%, and 5.3%, respectively, of these equity indexes are composed of energy stocks.

Has oil’s fall impacted the S&P 500 Index?

Last week, US crude oil September futures fell 1.3%. During the same period, the Energy Select Sector SPDR ETF (XLE) rose 0.1%. XLE was the lowest gainer among the SPDR ETFs that break the broad market into subsectors. So, the fall in oil prices might have added to the downside in these broad equity indexes. If oil prices retreat more, as we discussed in Part 1, it might drag these indexes in the future.

In the seven days that ending on August 10, the Consumer Discretionary Select Sector SPDR ETF (XLY) rose 0.8%—the largest gainer on our list. During this period, the Consumer Staples Select Sector SPDR ETF (XLP) fell 1.9%—the largest decline on our list.

Energy ETFs

Last week, the major energy subsector ETFs’ price metrics were:

  • The VanEck Vectors Oil Refiners ETF (CRAK) was unchanged.
  • The VanEck Vectors Oil Services ETF (OIH) fell 0.1%.
  • The Alerian MLP ETF (AMLP) fell 0.6%.
  • The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) fell 0.7%.

The fall in US crude oil prices might have been behind the downside in most of these energy ETFs last week. During this period, the Brent-WTI spread expanded by $0.46, which could have helped CRAK avoid the red zone. US refining stocks account for 42.5% of CRAK’s holdings.