US equity indexes

In the trailing week, US equity indexes had the following correlations with US crude oil active futures:

  • the S&P 500 (SPY): 53.2%
  • the S&P Mid-Cap 400 (IVOO): 55.1%
  • the Dow Jones Industrial Average (DIA): 69.9%

Has the S&P 500 Index Made Oil’s Fall Sharper?

These three equity indexes have exposure of ~5.4%, ~5.4%, and ~3.7% to the energy sector, respectively. The equity indexes fell 1.9%, 3%, and 1.4%, respectively, on May 16–23. US crude oil active futures fell 8.2% during this period.

Oil and equity indexes

The correlations indicate a positive relationship between oil and these US equity indexes. In recent months, movements in the broader market have dominated oil prices. This week, weakness in the broader market might have made oil prices fall sharper. Trade war tensions dragged the broader market.

Energy sector relative to the broader market

In the trailing week, the Energy Select Sector SPDR ETF (XLE) fell 4.7%. XLE had the largest decline among the SPDR ETFs that divide the broad market into subsectors. Weakness in the broader market and oil might have contributed to XLE’s downside. The Utilities Select Sector SPDR ETF (XLU) rose 2.5% and outperformed the SPDR ETFs. Most of the SPDR ETFs ended in the red.

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