S&P 500 / Broad Commodity
Selected range · January 1913 — May 2026
About this chart
The S&P 500-to-Commodities Ratio compares the level of the U.S. stock market with a broad index of commodity-related producer prices.
The numerator is the monthly S&P 500 index level. The denominator is the Producer Price Index by Commodity: All Commodities, which tracks changes in prices received by domestic producers across a broad range of commodities.
The ratio provides a long-term comparison between financial assets represented by large U.S. companies and prices within the broader commodity-producing economy.
The ratio rises when the S&P 500 increases faster than the commodity price index. It can also rise when commodity producer prices weaken while stock prices remain stable or decline more slowly.
A higher ratio means that U.S. equities are relatively strong compared with the broad commodity price index. This may occur during periods of strong corporate profitability, expanding equity valuations, subdued producer-price inflation, technological growth, or greater investor preference for financial assets.
The ratio falls when commodity producer prices increase faster than the S&P 500 or when equities weaken relative to commodities.
A lower ratio means that the broad commodity price index is relatively strong compared with U.S. equities. This may occur during inflationary periods, commodity-supply disruptions, strong demand for raw materials, weaker equity markets, or declining corporate valuations.
The denominator is a producer price index rather than the market price of a tradable commodity portfolio. The ratio therefore does not compare the investment performance of the S&P 500 with the return of a commodity futures index.
The absolute ratio level is also affected by the base levels of the two underlying indices. Its main purpose is to show how their relationship has changed over time rather than to provide a directly meaningful economic multiple.
The chart compares the S&P 500-to-Commodities Ratio with an estimated long-term exponential trend.
A deviation of 0% means that the ratio is equal to its estimated trend.
A positive deviation means that the S&P 500 is relatively stronger than the commodity producer-price index compared with the model’s long-term trend.
A negative deviation means that the commodity producer-price index is relatively stronger than the S&P 500 compared with the model’s long-term trend.
The standard-deviation zones show whether the current deviation is relatively common or historically unusual. Values farther above or below 0% represent less common historical relationships between U.S. equities and broad commodity producer prices.
The ratio can provide long-term context about relative cycles in equities, inflation-sensitive assets, and producer prices. It should not be interpreted as a direct valuation measure, a commodity investment return comparison, or a market-timing signal.
Limitations
- The commodity input is the Producer Price Index by Commodity: All Commodities, not an investable commodity or futures index.
- The model compares index levels and therefore does not measure the total returns of equities or commodities.
- PPIACO covers a broad range of producer prices and may behave differently from energy, metals, agriculture, or commodity-futures markets.
- Changes in the composition of the S&P 500 and the producer-price index may reduce comparability across distant historical periods.
- The exponential trend and standard-deviation zones depend on the selected sample period and regression specification.
- Supply shocks, inflation regimes, trade policy, and monetary conditions can cause persistent deviations from the historical relationship.
- An unusually high or low reading can persist and should not be interpreted as a precise valuation estimate or a market-timing signal.
Methodology
The S&P 500-to-Commodities Ratio is calculated by dividing the monthly S&P 500 index level by the monthly Producer Price Index by Commodity: All Commodities.
The model applies a natural logarithm to the ratio and fits the logged values to a linear monthly time trend. The fitted log values are converted back into normal ratio values using the exponential function. This produces the model’s long-term exponential trend. The percentage deviation measures how far each ratio observation is above or below the corresponding trend value. The standard deviation of the full historical percentage-deviation series is used to create the ±1σ, ±2σ and ±3σ zones around 0%. The z-score divides the current percentage deviation by that standard deviation, expressing the current observation in standardized historical units. The denominator is PPIACO, the Producer Price Index by Commodity: All Commodities — not an investable commodity index. The model uses monthly observations beginning in January 1913 and continues through May 2026 in the current workbook.
Data sources
Monthly U.S. stock-market index level used as the equity component of the ratio
Range: January 1913 to the latest available observation used by the model
Source: DataHub, Standard and Poor’s 500 Index Data; https://datahub.io/core/s-and-p-500
Producer Price Index by Commodity: All Commodities, not seasonally adjusted
Range: January 1913 to the latest available observation used by the model
Source: U.S. Bureau of Labor Statistics, Producer Price Index by Commodity: All Commodities [PPIACO], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/PPIACO