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Oil Prices Go from Headwind to Tailwind

Low oil prices have gone from hurting to helping the financial markets. In 2015 and early 2016, collapsing oil prices weighed on stocks as investors feared energy sector bankruptcies, reduced corporate spending, and lower earnings. Now, stocks are cheering low oil prices as energy savings accumulate for American consumers.

The following charts reveal that despite a nearly 20% drop in oil prices since early June, stocks have reached new highs and high yield corporate bond yields have remained low (low yields suggest less stress on corporate finances). These dynamics suggest that falling oil prices finally have switched from being a headwind to a tailwind for investors.

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DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.
Investment Advisory Team
Hefren-Tillotson

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