Energy stocks are becoming a popular bellwether for concerns over how deeply the Delta variant of the coronavirus is expected to impact the U.S. economy, as the so-called reopening trade that boosted some parts of the market earlier this year continues to stumble.
"It's definitely been a painful trade the last couple of months," as investors moved out of crowded positions in energy stocks that rallied at the start of the year, said Garrett Melson, portfolio strategist for Natixis Investment Managers Solutions.
Melson has been increasing his positions in energy stocks because believes that growth will continue to be comparatively robust, leaving the economy expanding at a level that will support oil prices. The mismatch, he believes, leaves “very little downside risk in the stocks once you start to see some relief from these fears that are permeating the sector."
The declines have also made some energy stocks much cheaper relative to their values earlier in the year. Exxon, for instance, now trades at a forward-price-to-earnings ratio of 12.6, compared to 30.9 in early March. The S&P 500, by comparison trades at a ratio of 22.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Wall St set to rise after Biden-Xi call, oil bounceU.S. stocks were on track to open higher on Friday as signs of easing tensions between the United States and China aided sentiment, while a jump in crude prices looked set to boost energy shares.
Read more »
Delta variant is example of mutation before our eyes
Read more »
Oil steady as Delta variant weighs on demand recoveryOil prices remained steady on Thursday as the Delta variant of the coronavirus continues to weigh on the demand outlook, offsetting a decline in U.S. Gulf of Mexico output because of damage caused by Hurricane Ida.
Read more »
Biden to unveil new strategy to combat delta variant amid surging case numbersPresident Joe Biden on Thursday will unveil a new strategy to combat the delta variant amid rising case numbers and falling poll numbers for his handling of the pandemic.
Read more »
How the Delta variant bottlenecked Biden’s presidencyThe White House had grand plans for the summer and fall. Now, everything comes down to getting the pandemic under control again.
Read more »
Biden to unveil six-step plan with 'new components' for combating COVID-19 amid Delta surge'We want to be specific about what we're trying to accomplish in this moment and what these six steps will do,' White House Press Secretary Jen Psaki said.
Read more »