Energy companies have been among the best performers so far this year, thanks to rising oil prices. However, the sector's impact is limited across the market, as energy companies provide little counterweight to tech behemoths, and the same fuel price hikes that are boosting energy stock bulls are hurting other companies' profits and potentially dampening consumer spending in other areas.
With a 48 % gain versus the index's 15% gain, the S&P 500 energy index is the best performer among S&P 500 sectors. Consumer basics, on the other hand, have had the lowest performance, with only a 3.1% increase. Devon Energy, Marathon Oil, Diamondback Oil, Western Oil, and Conocophillips are among the top 10 index gainers. In early trade, the index is up 2%, reaching its highest level since January 2020. Oil is at a seven-year high, and OPEC+ is keeping supply reasonably tight.
According to a recent report by Goldman Sachs, oil prices have little impact on aggregate S&P 500 profits per share, with each 10% increase in Brent prices raising S&P 500 EPS by 0.3 %, and energy accounting for only 4% of expected S&P 500 EPS in 2021. Due to falling oil inventories, stalling US-Iran negotiations, and OPEC+, Goldman has a positive $90 per barrel year-end projection for Brent.