CNNFN writes article about Why the stock market is obsessed with oil:
by Matt Egan @mattmegan5 January 26, 2016: 10:52 AM ET
How low can oil prices go?
How low can oil prices go?
These days it’s pretty easy to know which way the stock market will go:
whichever way oil prices are going.
Stocks and crude oil have been glued at the hip in 2016 — for better
or worse. It was a scary linkage last week when oil prices plummeted to
$26 a barrel, dragging the S&P 500 to levels unseen since April
2014. But then oil spiked a ridiculous 23% late last week,
carrying stocks sharply higher.
The S&P 500 is now almost perfectly correlated to the price of oil, a
CNNMoney analysis has found. It’s a rather peculiar phenomenon
given that oil prices and stocks has had virtually no correlation over
the past decade.
“We’re not in an environment where fundamentals are driving stocks. Oil
is driving sentiment,” said David Mazza, head of research for SPDR ETFs
and State Street Global Advisors Funds.
That sentiment has been pretty bleak so far this year. Both the Dow
and the S&P 500 are down about 8%. Even CNNMoney’s Fear and
Greed index has been flashing “extreme fear” lately.
Oil is hardly a proxy of the U.S. economy, so this kind of a
CNNFN Article Source Here.