Major benchmarks were taking a breather from their upward September march Monday, after a weekend attack on key Saudi oil production facilities sent crude prices soaring and sowed uncertainty in global financial markets.
As the chart above shows, the S&P 500 has, on average, risen 10.2% in the six months following one-day, crude-oil price spikes of 10% or more, nearly 4 percentage points higher than the 6.3% average growth of the S&P 500 during other periods. The Dow has risen 8.7% six months after a 10% crude surge, versus a typical 6.1% rise, while the Nasdaq has seen a 15.5% rise compared with a typical 8.2% ascent.
While some companies and households could bear the cost of higher oil prices, Stovall said, the increasingly large American energy sector will benefit, potentially leading to higher profits, hiring and investment for U.S. energy companies. Another foreboding example is June 20, 1990, when the price of crude oil rose 10.7% in the months leading up to the Iraqi invasion of Kuwait. As that conflict grew over the next year, there were more than two dozen instances when crude oil prices rose more than 5% during a single trading day. Six months after the initial price spike, the S&P 500 was 8% lower.
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