The national average price for a gallon of gas is at its lowest since February 2011 after declining more than 11% from $3.594 to $3.186 since the start of September, Bespoke says. The rolling 100-day gas-price decline is nearly 12%, marking the fifth time that's happened in the bull market that began in March 2009.
Lower gas prices, of course, leave consumers with more disposable income to spend on other things.
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The good news: Gas price drops of 10% or more have proved bullish for stocks in the past, Bespoke's data show. In every one of the four prior periods when gasoline suffered a double-digit percentage drop, the Standard & Poor's 500 stock index was higher one, three and six months later.
"While one would expect stocks to do well when gas prices decline, the consistency of positive returns was surprising," says Paul Hickey, co-founder of Bespoke.
Stock market returns during periods of falling gas prices were also bigger than the average returns during the current bull market. The average one-month return following 10% drops in gas prices was 3.7%, vs. 1.5% for the entire bull market, Bespoke data show. Similarly, average three-month gains were 9.6%, nearly six percentage points better. The six-month average gain when prices were falling was 11.5%.
Follow Adam Shell on Twitter: @adamshell.
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