NOT A PERFECT RELATIONSHIP, but, for basics. The stock market goes up on profit — which is net of costs. One common element of cost is energy — oil for transportation, factory operation (heat, electricity). As cost of oil rises so does all the basic non-labor costs … so profits go down. Thus stock prices/values decreased .HAs others have mentioned, it depends on why oil is going up or down.
If it’s going up because of increased demand, that’s a sign of increased economic activity. It should be good for the stock market.
But if it’s going up because of supply shocks — like right now, when it looks like a lot oil in Russian is not selling to sanctioned countries like USA lowering the supply from the market and the supply of oil from Venezuela is falling — then the higher oil prices are simply going to act as a tax, taking money away from consumers who would normally use the money for other purposes that are more profitable for US companies.
Similarly, when oil goes down, if it’s because of reduced demand, i.e. a softening economy, that’s going to be bad for the economy. But if it’s because of increased shale oil output or competition for market share among OPEC countries, that’s good — it’s like a tax cut that leaves consumers with more money to spend.
Also, the energy sector represents 6.3% of the S&P 500 index. So to some degree, when oil prices go up, the price of energy-related stocks go up, and that will also affect the stock market as a whole. @TigerEvents@TigerStarsdo feature
Why is stocks rising now due to the increased in supply form other sources . $SPDR S&P 500 ETF Trust(SPY)$$Nasdaq 100 ETF(QQQ)$$iPath Pure Beta Crude Oil ETN(OIL)$
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