GDP is a widely used indicator of a country’s wealth. Logically, one would expect this metric to be linked in some way to the value of stocks. After all, in the long run, the growth rate of the two should be identical. If businesses were to grow faster than GDP, they'd eventually represent virtually the entire economy, at which point the two would be one and the same. If the opposite were true, businesses would shrink until they became nonexistent. But what does the data say? The results are, actually, quite interesting. U.S. GDP and S&P 500 Comparing the quarterly values for the S&P 500 to the nominal US GDP from 1950 to today reveals a quite strong relationship between the two. This is not something unexpected. What is surprising, however, is the effect that financial crises seem to have on the relationship between the two. Looking at the chart above, GDP almost seem to function as a moving average (or support even) for the market. In the long run, the tw...