Oil stocks are the new FAANGs?One reason why stocks have stumbled out of the gate in 2022 is the underperformance of Big Tech stocks. Weak results and guidance from Facebook owner Meta Platforms tanked the FAANGs last week.
Meta's (FB) shares have plunged more than 30% this year. So are shares of Netflix (NFLX). Amazon (AMZN) is still down about 7% despite a big stock pop Friday after reporting solid results. Microsoft (MSFT) is down about 10% and Tesla (TSLA) has fallen nearly 15%. Apple (AAPL) and Google owner Alphabet (GOOGL) have fared better due to strong earnings.
But even as tech struggles, investors are flocking to energy stocks. The Energy Select Sector SPDR (XLE) ETF is up nearly 25% this year as crude oil prices skyrocket.
Chevron (CVX) is leading the Dow with a 15% gain while Exxon Mobil (XOM) is up more than 30%. Halliburton (HAL), Schlumberger (SLB), Occidental Petroleum (OXY), Hess (HES) and APA (APA) are among the top gainers in the S&P 500.
Higher oil and gas prices are not good for consumers. But investors are pleased to see rising energy costs because it means more profits for oil giants.
Along those lines, Exxon analysts have raised their earnings forecasts for 2022 by 16% over the past three months and have raised their 2023 profit targets by 20%.
"We're seeing this sector rotation into energy," said Tony Minopoli, chief Investment officer at Knights of Columbus Asset Advisors. "Stocks will follow earnings."