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We examine whether the US stock market significantly responds to the movement of commodity spot prices during the COVID-19 crisis. We regard gold and crude oil as representatives of the commodity spot market, movements in the S&P 500 index as a proxy to the US stock market performance and movements in sector-specific weekly market capitalization as the sector performance. Our empirical findings show that the movement of the S&P 500 index is significantly associated with fluctuations in gold prices but not in crude oil prices during the Covid-19 crisis. However, the 2SLS regression results show a significant comovement between commodity spot prices and the index, the results consistent with the potential omitted variable bias issues in our original regression analysis. The incremental effect of gold (crude oil) price on the index movement was dominant in the post-lockdown (pre-lockdown) period. During the COVID-19 crisis, both gold and crude oil prices had a unidirectional negative effect on the performance of specific sectors such as healthcare and energy. Only crude oil prices have a significantly negative effect on the performance of consumer discretionary, IT and utility sectors, whereas only gold prices significantly negatively impacted the performance of others such as industrial, materials, real estate, financial and communication services sectors. Uniquely, gold prices positively influence the performance of the consumer staples sector during the crisis. Our findings are robust with the instrumental variable approach and immune to simultaneity bias. Our study is the first to explore the association between commodity spot prices and the US stock market performance during the COVID-19 crisis while controlling for the effects of market and economic factors.

We examine whether the US stock market significantly responds to the movement of commodity spot prices during the COVID-19 crisis. We regard gold and crude oil as representatives of the commodity spot market, movements in the S&P 500 index as a proxy to the US stock market performance and movements in sector-specific weekly market capitalization as the sector performance. Our empirical findings show that the movement of the S&P 500 index is significantly associated with fluctuations in gold prices but not in crude oil prices during the Covid-19 crisis. However, the 2SLS regression results show a significant comovement between commodity spot prices and the index, the results consistent with the potential omitted variable bias issues in our original regression analysis. The incremental effect of gold (crude oil) price on the index movement was dominant in the post-lockdown (pre-lockdown) period. During the COVID-19 crisis, both gold and crude oil prices had a unidirectional negative effect on the performance of specific sectors such as healthcare and energy. Only crude oil prices have a significantly negative effect on the performance of consumer discretionary, IT and utility sectors, whereas only gold prices significantly negatively impacted the performance of others such as industrial, materials, real estate, financial and communication services sectors. Uniquely, gold prices positively influence the performance of the consumer staples sector during the crisis. Our findings are robust with the instrumental variable approach and immune to simultaneity bias. Our study is the first to explore the association between commodity spot prices and the US stock market performance during the COVID-19 crisis while controlling for the effects of market and economic factors.