Stock Market Investors » Glossary of Stock Terms » What is a Bellwether?

What is a Bellwether?

Bellwether stocks are generally viewed as an indicator of overall market or sector direction. The term bellwether itself is used to describe a company that is recognized as the leader in its industry. Since bellwether stocks are perceived as indicators of market trends, when a bellwether stock goes up or down in price, the entire sector of this stock may move in the same direction.

Microsoft, for instance, is a bellwether stock in the computer software sector. Other bellwether companies are Wal-Mart, Intel, General Electric, McDonald's, etc.

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