Slow Start: 2022 has been a brutal year for stocks. In fact, the first six months of the year were the worst first six months for the stock market in more than 50 years, according to NPR.
But, for most of the year, there has been one “flight-to-safety” sector that investors, from retail traders to Warren Buffett, rushed to: energy. Stocks like Peabody Energy Corp BTU, a leading coal company, have a positive return of more than 100% throughout the last year.
Bear Down: But, with the recent sell-off in oil, energy stocks have largely given back their gains, dragging the energy sector into the same bear cave in which the other sectors have been residing. Some traders and investors predicted this, that as recession fears mount, oil will eventually have to retreat as demand for petroleum decreases in recessionary times.
The Energy Select Sector SPDR Fund XLE, one of Wall Street’s favorite indexes to track the energy market, has fallen more than 23% during the past month. While that puts the sector officially in bear-market territory, the XLE is still up nearly 20% YTD, and nearly 30% higher in the last year.
Some traders, including Mark Dow, founder of Dow Global Investments, see this recent correction in the energy market as a buying opportunity.
Buy oil stocks. Now. — Dow (@mark_dow) July 6, 2022
“Unprecedented Times”: Like virtually every other sector, there is a myriad of uncertainties surrounding the energy industry that is making it hard for analysts to make directional predictions about the price of oil.
Recently, analysts at J.P. Morgan said that oil could reach as high as $380 a barrel, while Citi analysts stated that prices could drop to $65 a barrel, a more than 30% decrease from its current prices.
The large discrepancy in price targets shows the difficulty in predicting the future in this macro environment driven by global inflation fears, recession risks and a war in Russia and Ukraine.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.
All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.
Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.
Rate collection and criteria: Click here for more information on rate collection and criteria.