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Has the S&P 500 Index Moved Opposite to Oil Prices?


Jul. 1 2019, Updated 7:55 a.m. ET

US equity indexes

In the last week, US equity indexes’ correlations with US crude oil active futures were:

  • the Dow Jones Industrial Average (DIA): 47.5%
  • the S&P 500 (SPY): 19.1%
  • the S&P Mid-Cap 400 (IVOO): -13.8%

These three equity indexes have exposure of ~5.1%, ~5.2%, and ~3.6% to the energy sector, respectively. The equity indexes fell 0.8%, 1%, and 0.9%, respectively, on June 20–27, while US crude oil active futures rose 4.1%.

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Oil and equity indexes

The above figures indicate a weaker correlation between oil and US equity indexes. Individual factors dominated oil and the equity market. The market expected OPEC’s increasing production cut rates to drive oil prices. For the equity market, trade war concerns played an important role.

Energy and broader markets

In the trailing week, the Energy Select Sector SPDR ETF (XLE) fell 1.1%—the third-lowest decline among the SPDR ETFs. The rise in oil prices didn’t boost XLE’s returns into the green territory. The broader market could have dragged XLE. The Materials Select Sector SPDR Fund (XLB) fell 0.1%—the lowest decline in the SPDR ETFs that divide the broader market into different sectors. The Real Estate Select Sector SPDR Fund (XLRE) fell 4.8% and underperformed the SPDR ETFs. All of the SPDR ETFs ended in the red.


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