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Will the S&P 500 Index Continue Its Rally in November?

PART:
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Part 9
Will the S&P 500 Index Continue Its Rally in November? PART 9 OF 9

These Factors Hurt the Energy Sector in October

Energy sector

The energy sector saw a weaker performance in October 2017. The Energy Select Sector SPDR Fund (XLE), which tracks the performance of the energy sector, fell nearly 1.1% in October 2017. On a year-to-date basis, this ETF fell nearly 7.7% as of October 30, 2017.

These Factors Hurt the Energy Sector in October

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In spite of rising crude oil prices, the energy ETF fell in October 2017. Between October 1 and October 30, 2017, WTI crude oil December 2017 futures rose nearly 6.8%. The crude oil price is rising near its 2017 high of $54.9. Between October 19 and October 26, the XLE had a correlation of 62.9% with crude oil prices. It was the second highest correlation with crude oil.

The Alerian MLP ETF (AMLP) had the highest correlation with crude oil during this period. The correlation was at 65.2%. In spite of the positive correlation with crude oil (USO) (UCO), the energy sector ETF remained weaker in October. The weaker earnings figures are hampering the movement of energy stocks. Higher debt levels have affected energy stocks’ earnings.

Major holdings of the energy sector

ExxonMobil (XOM), Chevron (CVX), and Schlumberger (SLB) returned nearly 1.9%, -2.6%, and -8%, respectively, in October 2017.

You may be interested to read Dan Loeb Says These Factors Could Drive the S&P 500 Higher.

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