While there is no shortage of "reasons" for this week's sell-off, we thought we would highlight another one to add to the list. Interestingly, energy prices have been the subject of much discussion throughout this entire bull market. However, at least from our view, it seems as though the recent rise in oil and gas prices has received little attention over the last several days. As our experience has shown, it's not until these topics receive attention that they are normally priced into the market.
As the chart below highlights, the relationship between prices at the pump and the S&P 500 has been interesting to say the least. On the one hand, every rally in gas has been accompanied by a decline in stocks, while every decline in gas has been accompanied by a rally in stocks. Longer term however, both have risen. So while price increases in gas have had a negative short-term impact on stock prices, longer term, the two have been positively correlated.
Inflation Long Term?
Posted by: AG | March 03, 2007 at 04:10 PM
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Posted by: Ki$$ | March 03, 2007 at 04:42 PM