South-Western EconData -- Stock Prices: S&P 500

Explore further current and historical data for the S&P 500 and how it relates to corporate after-tax profits , the Index of Leading Economic Indicators, and the 30-Year U.S. Treasury Bond.

Current and Historical Data for the S&P 500
Review the current and historical data for the S&P 500 by quarter at Economagic.com.

The S&P500 and After-Tax Corporate Profits: Annual Percent Change Relative to Same Period Last Year
Contrary to what we might expect, changes in the S&P 500 do not always reflect changes in corporate after-tax profits, as indicated in the diagram below. One reason is that stock prices reflect expectations of future profitability. Thus if a corporation announces that next quarter's earnings are expected to be below expectations, the firm's stock will fall at the time of the announcement. Accordingly, we can see in the diagram that changes in the S&P 500 tend to be a leading indicator of corporate after-tax profits. The sharp slowdown in economic activity in 2001, punctuated by the terrorist attacks of September 11th, resulted in a both the S&P 500 and corporate profits experiencing a sharp decline at the same time, an event that also occurred in the recessions in the early 1980s and the early 1990s. Corporate profits have grown sharply since early 2006, which may have also helped lift the S&P 500 index.

Economagic.com provides a more complete collection of data for the following:
Corporate After-Tax Profits I S&P 500 Monthly Close

The S&P500 and the Index of Leading Economic Indicators: Annual Percent Change Relative to Same Period Last Year
The S&P 500 is an element of the Index of Leading Economic Indicators, and we can see in the diagram below that they tend to move together (though the stock index experiences considerably more fluctuation than the leading indicators index). Note that the Index of Leading Economic Indicators declined prior to each of the U.S. recessions since 1980, including the recession that began in March 2001. The S&P 500 tends to decline during recessions due to reduced demand and other factors. The leading economic indicators began indicating recovery in November 2001, but investors in the stock market did not respond with enthusiasm, and thus the S&P 500 continued to decline until the third quarter of 2003. Please note that the methodology used for calculating the Leading Index was changed beginning in June 2005 to give more weight to the interest rate spread, among other factors. Thus it is difficult to compare the index since June to the previous methodology. Over the last two years the S&P 500 index has been growing moderately, while the rate of growth in the leading indicators index has fluctuated around zero.

Economagic.com provides a more complete collection of data for the following:
Index of Leading Economic Indicators IS&P 500 Monthly Close

The S&P500 and the 10-Year Treasury Bond Yield: Annual Percent Change Relative to Same Period Last Year
There is generally a strong inverse relationship between interest rates, such as the yield on the prominent 10-year U.S. Treasury bond, and stock prices, as indicated by the S&P 500 index. One can see in the diagram below that the periods of negative growth in the S&P 500 occurred when the yield on the 10-year Treasury bond was rising. There are several reasons for this inverse relationship. For example, rising interest rates raise the cost of corporate borrowing and thus reduce corporate profits. Moreover, rising interest rates raise the opportunity cost of investing in stocks by increasing the return on bonds and other interest-bearing financial assets. The exception to the inverse relationship between bond yields and stock prices is that both the S&P 500 and bond yields can fall during periods of sharp economic slowdown and recession due to falling corporate profits and inflation pressures, both of which contribute to declining bond yields. By 2004, stock and bond markets had largely worked through the shocks due to collapse of the dot-com bubble, the recession, and 9/11, and we once again see the return of an inverse relationship between 10-year bond yields and the S&P 500 index.