For a while there, the price of gas was relatively contained even as WTI crude oil rallied. In recent days, however, the price of Brent crude oil has heated up and prices at the pump have followed suit. The chart to the right shows the price of the front month unleaded gasoline contract over the last six months. The red portion of the chart shows just the last month where gasoline prices have rallied by more than 7%.
So how will higher prices at the pump impact the stock market? The chart below compares the rolling four-week change in gasoline prices to the S&P 500 since the start of 2012. Over the last 13 months, there have been two prior periods where gasoline prices saw similar one-month percentage increases. As shown in the chart, each time that happened, the S&P 500 saw a short-term peak in the next few weeks. If you were to look further back, there are plenty of periods where gasoline prices spiked and equities saw little impact, but recently, spikes in prices at the pump have been met with lower stock prices.