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 tends 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 , has 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. It is interesting to note that while corporate profits improved throughout 2002 and into 2003, this improvement was not anticipated by a rise in the S&P 500 until the second quarter of this year. Corporate profits appear to have stopped decreasing in the second quarter of 2003, and the equity markets seem to be anticipating improved economic conditions in the near future.

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

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. Note that the excess production capacity that marked this most recent recession slowed the recovery in corporate profits and the S&P 500. The S&P and the Index of Leading Economic Indicators both improved through the second quarter of 2003.

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

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. More recently this inverse relationship has been less strong, in part because the yield on the 10-year U.S. Treasury bond has been "artificially" lowered by the growing scarcity of these bonds as the federal government buys them back in the process of reducing the national debt. 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 when inflation rates are low and the Fed is free to reduce interest rates. Both bond yields and the S&P 500 increased sharply in mid-2003 in anticipation of stronger economic growth in 2004.