A rally in U.S. energy shares is crumbling, as fears of a global recession have prompted investors to take profits in one of the few corners of the stock market that has thrived this year.But the sector has slid 27% since June 8, when it hit its highest in nearly eight years, and now stands at its lowest level since the end of February. Oil major Chevron is down 24% over that time, with Exxon Mobil down 22%.
The surge in oil prices as the global economy recovered from early pandemic lockdowns put a charge into energy shares, which languished during the 2010s. U.S. crude topped $130 a barrel in March, its highest since 2008, driven up as the war in Ukraine “took an already tight market and made it really tight,” Glickman said.
One reason for the decline is investors “finding the few places where you have had winners and taking that profit before it goes with the rest of the market,” said Rick Meckler, a partner at family investment office Cherry Lane Investments. “Outflows from Economic Sensitive sectors show signs of caution as investors begin to unwind Energy bets and dial back Financials exposure,” Scott Chronert, an ETF and equity strategist at Citi, said in a note on Tuesday.
What goes up…