By David Randall
NEW YORK (Reuters) – The so-called coronavirus delta divergence, which boosted some parts of the market earlier this year, is becoming a wake-up call for energy shareholders who are worried about how deep the US economy will look. Stumbling.
The energy sector declined by 12.3% for the quarter compared to 3.7% for the S&P 500. This is in line with the sector’s performance in the quarter, which is expected to increase energy demand for vaccinated economy.
With more than 2% inflation, some investors believe that the recovery of the US economy could be a major factor in the resurgence of coronavirus, which has led them to focus on the slow pace of simple monetary policy. S&P has more than doubled since the March 2020 crash.
Investors have returned to the high-tech stocks that have dominated the market for years, and other reopening events such as airlines and hotels have stalled. The S&P technology sector grew by 6.8% this quarter.
“Increasing the number of Delta Alternative Issues has led to a resurgence of domestic defense stocks, such as technology,” said Jeffrey Kleintop, director general of the International Investment Strategy. Charles Schwab (NYSE 🙂 You are seeing stocks reopen and working hard.
Investors will have more readings on the health of the US economy next week by identifying consumer price indexes, retail sales and consumer sentiment.
To what extent can the declining economy now affect property prices?
Morgan Stanley (NYSE 🙂 Last week it raised concerns about slowing growth as U.S. stocks slowed, with Goldman Sachs (NYSE 🙂 Economists forecasting U.S. economic growth in the third quarter to 5.5% from 9% in August.
Those concerns have been weighed against energy stocks with companies Exxon Mobile Corporation (NYSE 🙂 and Chevron Corporation (NYSE 🙂 is down 13% for the quarter.
For the past two months, the past two months have been a painful one for investors, “said Garrett Melson, a portfolio strategist with the solutions for Nactics Investment Managers.
However, some investors continue to thrive because of the potential for a slowdown in coronavirus counts.
Melson is expanding his position in energy storage because he believes growth will continue to be relatively strong, and the economy will expand in support of oil prices.
In general, energy prices in the energy sector seem to reflect $ 50 per barrel, which is currently less than $ 72.50 for Brent Oil, said Ben Cook, general manager of the Hansy BP (NYSE 🙂 Energy Transfer Fund portfolio. He was being promoted to a major oil company.
He said that the imbalances would relieve some of these fears, and that it would “reduce the risk of a slight fall in stocks.”
“When the global consumer returns to the old economic system, there will be a difficult supply chain to meet demand,” he said.
The downturn made some energy reserves much cheaper than they had at the beginning of the year. Exxon, for example, is currently trading at 12.6 forward-to-earnings ratio compared to 30.9 in early March. S&P 500, by 22 percent in comparison transactions.
Energy stocks could continue to decline in the short term, according to Burns McKinney, senior portfolio manager of the NFJ Investment Group.
He added that the sector is growing in demand for more efficient emission standards and electric vehicles than the Biden administration. McKinney said he was focusing on companies that had recently increased their profit margins rather than betting heavily on energy, a sign that corporations believe their balance sheets will be enough to withstand the recession.