Oil and the Stock Market: An Industry Level Analysis

The Financial Review, Forthcoming

23 Pages Posted: 30 Nov 2006 Last revised: 30 Apr 2010

See all articles by Sridhar Gogineni

Sridhar Gogineni

The University of Tampa - John H. Sykes College of Business

Multiple version iconThere are 2 versions of this paper

Date Written: February 19, 2010

Abstract

I investigate the impact of daily oil price changes on the stock returns of a wide array of industries. I find that in addition to the stock returns of industries that depend heavily on oil, stock returns of some industries that use little oil also are sensitive to oil prices perhaps because their main customers are impacted by oil price changes. In addition, I present robust estimates of industries’ cost-side and demand-side dependence on oil. These measures can serve as reliable benchmarks when classifying industries into oil-intensive and non-oil intensive groups, a distinction widely used in studies and media without any quantitative justification so far. Further, I find that the sensitivity of industries’ returns to oil price changes depends on both the cost-side and demand-side dependence on oil and that the relative effects of these factors vary across industries.

Keywords: Oil Prices, Stock Price Reaction, Commodities, Clientele

JEL Classification: G10, G14

Suggested Citation

Gogineni, Sridhar, Oil and the Stock Market: An Industry Level Analysis (February 19, 2010). The Financial Review, Forthcoming . Available at SSRN: https://ssrn.com/abstract=947568

Sridhar Gogineni (Contact Author)

The University of Tampa - John H. Sykes College of Business ( email )

401 W. Kennedy Blvd.
Tampa, FL 33606-1490
United States
8132533163 (Phone)

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