How is the stock market affected by the price of oil, and why?

Please be as straightforward as possible!How is the stock market affected by the price of oil, and why?
Most basic effect as far as I know is that the price of oil affects transportation costs, increasing overhead for a lot of companies and decreasing revenues. This impacts the stock holders. Knowing this, brokers and firms get uneasy when the oil price goes up, potentially triggering bad days.How is the stock market affected by the price of oil, and why?
The stock market can be effective by the price of high oil especially transportation companies - think trucking Fed Ex, UPS, airlines such as Southwest, American Airlines and Delta. You can say that for some companies there is a positive correlation to the price of oil. The higher the price of oil is bad for companies because it cuts into profit margin or profits.





Over all you can look at any company and see the consequences of higher oil or transportation costs everything from retail, food and groceries, clothing, etc. Look at the percentage of their budget or expenses per year for transportation or distribution.





Even for consumers - you can look at the number of cost increases because of the of increases in shipping costs. Look at receipts for fuel surcharges.






High energy (oil) cost hurts almost all businesses, cutting into their profits. Some, like airlines and automakers, are hurt more than others and in a very direct way. Thus such stocks will go down when oil is high.





When oil goes down in price it is usually good for the stock market, but not always. Today oil continued to decrease but it didn't help the market at all. That is because things are so bad economically now that it is thought that the actual demand for oil and other things is decreasing.
The relationship between oil and the stock market over the last year has been pretty tight, until now. When oil prices went up, the stock market went down, due to inflationary worries and the rising cost of doing business for corporations. Presently, this relationship has reversed. Some traders feel that falling oil prices suggest a weak global economy, and therefore, a weak stock market, especially in the big cap tech sector that relies on exporting its products.





In the long run, there is not that much correlation between stocks and crude oil. Crude oil prices can go up and down for a variety of reasons, while stocks are affected by so many other factors. Therefore, if you are a long term investor, don't get too bothered with crude oil prices. Good companies will adjust their way of doing business in a world of changing economic conditions.





Scott Cole


www.kungfutrader.com
the rich people dont suffer no matter what fluctuations (up and down) occur...the economy runs in cycles (boom, then recession, then boom ,then recession..)and so the rich stockowners will lose a lot of their artrificial value in a recession, but they are still fundamentally rich through it, then another boom happens, and theyve scooped up a few bargains in the meantime (recessions provide opportunity)..and so over he long haul, they get richer and richer and richer








as for oil? it increases the prices of other products that rely on energy and transportation (so oil) as part of their cost to produce





and it may even produce a recession





but like i said, over the long haul..the b*st*rds just get richer and richer...a little cyclical recession doesnt bother them at all (they just find bargains, and get richer)


..so as for oil prices..they weather through it,finding where the opportunities move to,and maybe buy some oil stock, eh? and get rich off the higher prices of that too!!!
alright well, if the price of oil rises then obviously the price of gas rises. if the price of gas rises, then people are willing to spend less money since they need to save more. if people are saving more, then they are buying less items such as stock. if people are willing to buy less stock, then price of stock will be effected too. is that good enough?
oil is a commodity on the market. if it goes up then the market will go up.