What does Bellwether stock mean?

The bellwether stock is a kind of stock that belongs to a firm or corporation that is a leader in the respective industry it is in. An example of this could be IBM which is considered a leader in the computer hardware industry, thus its stocks are bellwether stocks.

The bellwether stock is a security whose value movements are regarded to be somewhat of an indicator of the movement of the whole market. Most of the times the fortune of an industry is reflected in the performance of its respective bellwether stock.