Bellwether Stock

DEFINITION of 'Bellwether Stock'

A stock that is believed to be a leading indicator of the direction of a sector, industry or market as a whole. Bellwether stocks are often used to determine the direction in which an industry or market is headed in the short term.

BREAKING DOWN 'Bellwether Stock'

Bellwether stocks are typically large-cap equities that when performing well signal a bullish market but when performing poorly may signal a bearish market. Many different stocks may be classified as bellwethers; however, shipping and rail stocks have historically been particularly good bellwethers for the U.S. economy.

RELATED TERMS
  1. Bellwether

    An event or indicator that shows the possible presence of a trend. ...
  2. Barometer Stock

    A security whose performance is considered to be an indicator ...
  3. Benchmark Bond

    A bond that provides a standard against which the performance ...
  4. 30-Year Treasury

    A U.S. Treasury debt obligation that has a maturity of 30 years. ...
  5. Profit Taking

    The act of selling a security in order to lock in gains after ...
  6. Pairs Trade

    The strategy of matching a long position with a short position ...
Related Articles
  1. Stock Analysis

    5 Stocks with Predictive Qualities (UNP, CNI)

    Learn about five stocks that have predictive qualities. Find out what investors can learn from bellwether stocks, price correlations or leading indicators.
  2. Investing

    How to Use Earnings Season to Make Better Decisions

    Earnings season reflects the state of the stock market, but also demonstrates how the overall economy is performing.
  3. Mutual Funds & ETFs

    Top-Down Analysis: Finding The Right Stocks And Sectors

    The top-down investment strategy depends on economy and market strength. Find out what you should know before jumping in.
  4. Active Trading Fundamentals

    Ways To Gauge The Market Open Direction

    Accurately predicting the stock market’s opening moves can be a useful tool. If your projection is accurate, you have opportunity to profit. Of course, the first step is to correctly gauge the ...
  5. Fundamental Analysis

    Is a U.S. Industrial Recession on the Horizon in 2016?

    Find out why the industrial economy may be teetering on an industrial recession and what could prevent it from going over the cliff.
  6. Economics

    3 Ways To Tell If Your Stock Has Bottomed

    No one can call stock bottoms with absolute certainty, but there are some common trends that appear when stocks are about to hit bottom.
  7. Active Trading

    Eight Items That Impact Daily Trades

    Find out which factors can help you squeeze more profit out of each position.
  8. Investing Basics

    What is a Leading Indicator?

    A leading indicator is a measurable economic factor that tends to change right before the economy starts to change.
  9. Professionals

    Bullish Vs. Bearish

    Bullish Investors who believe that a stock price will increase over time are said to be bullish. Investors who buy calls are bullish on the underlying stock. That is, they believe that the stock ...
  10. Investing

    Advising FAs: How To Explaining Stocks to a Client

    Without a doubt, common stocks are one of the greatest tools ever invented for building wealth.
RELATED FAQS
  1. What is the history of the S&P 500?

    Discover the history of the S&P 500, which sophisticated market participants consider to be the best index to understand ... Read Answer >>
  2. Are mid-cap stocks more profitable than large-cap stocks?

    Learn if investing in a mid-cap stock may yield better performance than doing so in a large-cap stock. Learn the traits mid-cap ... Read Answer >>
  3. What average annual return does the railroads sector generate?

    Calculating the average annual return of the railroad sector provides insight into the overall performance of rail companies ... Read Answer >>
  4. Is the banking sector appropriate for a growth investor?

    Explore the suitability of bank stocks as a sector appropriate for growth investors to consider including in their investment ... Read Answer >>
  5. What economic indicators should be monitored when investing in the industrial sector?

    Discover the economic indicators to monitor when investing in the industrial sector. The industrial sector is cyclical and ... Read Answer >>
  6. How does the risk of investing in the industrial sector compare to the broader market?

    Discover how the risk of investing in the industrial sector compares to the broader market. The industrial sector is highly ... Read Answer >>
Hot Definitions
  1. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  2. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  5. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  6. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
Trading Center