Why stocks are taking their cues from crude-oil prices

Like Reggie Jackson for the Yankees circa the late-1970s New York Yankees, oil is the straw that stirs the drink for global markets.

The fluctuations in crude oil have dictated the direction for the stocks. A slide in oil futures has more times than not resulted in a tumble in the broader stock market. Conversely, a rise in oil prices, as was seen on Monday when West Texas Intermediate oil CLZ5, -0.36%  saw a 2.5% pop to settle at $41.74 a barrel, has delivered a bump to stocks. The following table from Dow Jones data show that a strong positive correlation between oil and stocks has really taken hold in July and August of this year.

All the main U.S. indexes surged sharply higher on Monday, highlighted by a more than 230-point rally in the Dow Jones Industrial Average DJIA, +1.38%

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