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Energy Stocks Retake The Lead For U.S. Equity Sectors In 2021

By James PicernoStock MarketsSep 28, 2021 07:41AM ET
www.investing.com/analysis/energy-stocks-retake-the-lead-for-us-equity-sectors-in-2021-200603300
Energy Stocks Retake The Lead For U.S. Equity Sectors In 2021
By James Picerno   |  Sep 28, 2021 07:41AM ET
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As oil and gas prices soar, energy shares are back on top for year-to-date performance for US equity sectors through Sep. 27, based on a set of exchange traded funds.

Energy Select Sector SPDR Fund (NYSE:XLE is up nearly 44% so far this year, marking a dramatic rebound after a summer of weakness.

XLE Daily Chart
XLE Daily Chart

Analysts are pointing to supply shortages as the catalyst for the recent runup in energy prices, a bounce that’s driving stocks in this sector higher.

“While we have long held a bullish oil view, the current global oil supply-demand deficit is larger than we expected,” advise Goldman Sachs strategists in a note to clients.

Highlighting the shift in expectations: Brent crude oil, the international benchmark, topped $80 a barrel on Tuesday – the highest since 2018. “In oil we’re over $80 a barrel this morning on a Brent basis and we look at the rig counts in the U.S. and other parts of the world, they’re showing you that, hey, $80 a barrel is simply not enough,” says Jeff Currie, who heads up commodities research at Goldman Sachs (NYSE:GS).

Financials and real estate are distant second- and third-place sector performers this year, respectively. All the US equity sectors are posting year-to-date gains, although the laggards are far behind. The softest gain this year is in utilities via Utilities Select Sector SPDR® Fund (NYSE:XLU), which is up a modest 5.0%.

The broad stock market is up 19.6% year to date, based on SPDR® S&P 500 (NYSE:SPY).

ETFs YTD Returns Thru Feb 19, 2021
ETFs YTD Returns Thru Feb 19, 2021

Comparing the strongest and weakest sector performers year to date currently shows an astonishing 39 percentage-point spread by way of surging energy stocks (XLE) vs. sinking prices for utilities (XLU).

XLE Daily Chart
XLE Daily Chart
Energy Stocks Retake The Lead For U.S. Equity Sectors In 2021
 

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Energy Stocks Retake The Lead For U.S. Equity Sectors In 2021

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