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.

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