The S&P 500 And The Crude Oil Forecasts:
The S&P 500 Forecast: Brent Crude Oil Prices Rebound Sees Energy Earnings, The Pace Of Technology
Us stocks sharply higher to start the week, the S&P 500 reached its highest level since the beginning of March. In the Hope of a corona virus vaccine, and commentary from Fed Chairman Jerome Powell, were presented as the engine of the rise, and even a bullish move in crude oil and other growth-related assets, suggesting robust appetite for risk. More precisely, the rebound of brent crude oil has seen the commodity rise to its highest level since March 13, and that has probably strengthened the performance of certain of S&P 500 and stocks in the energy sector.
The Energy Sector Exceed Gross-and-Technology-in-Stock-Bounce – (March 20 – Present)
The Chart created in TradingView
To this end, the ” XLE ” ETF “reveals” the energy industry has been one of the best sectors of the S&P 500 since the index has marked its low on March 20. That being said, the energy remains well below the performance of the technology, and, indeed, of the entire S&P 500, the year-to-date. Thus, it is likely that a certain degree of preference is granted because the sector has been one of the most devastated in the first accident, but the recent upturn in crude oil prices could fuel fusion high for the industry, regardless.
Further still, a continuation of the increase in the crude oil should ease the pressure for small-scale producers, who have been immersed in the non-profitability that the possession of the goods, are quickly shifted from an asset to a liability. In turn, the accumulation of stress and may reduce the risk of widespread bankruptcies, which, until now, have not materialized as many analysts first warned. That being said, the energy producers and the US shale industry is far from safe, but the turn higher in the crude oil, it is a sign of welcome.
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More generally, the strong performance of the energy sector is an encouraging sign for the S&P 500. Last week I asked if the stock market rally was not based as the Nasdaq 100 is pressed significantly higher than its counterparts on the back of some values in technology.
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Therefore, a more widespread stock rally may suggest that investors see a greater economic recovery is on the horizon. While the concern on the sustainability of the rally can be justified in that the vaccine remains a distant and businesses have all the parts, we can assert broader participation, is a step in the right direction for a greater recovery. In the meantime, follow @PeterHanksFX on Twitter, updates.
–Written by Peter Hanks, senior Analyst for the DailyFX.com
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