The following graph shows the percentage change in the SPDR S&P 500 ETF’s (SPY) component sectors on Monday, October 26.
Energy sector’s leading decliners
The Energy Select Sector SPDR ETF (XLE) dropped by 2.5% that day. The fall in oil prices due to the supply glut led to the fall in energy stock prices. Valero Energy Corporation’s (VLO) and Marathon Petroleum Corporation’s (MPC) stocks were the only ones to gain slightly that day. Both companies are into oil and gas refining and marketing, which gained on weak oil prices as oil serves as a raw material for the industry. Moreover, this week, Valero is expected to report better-than-expected performance for the third quarter. The company is best positioned to profit from the slump in the oil prices. The slump would allow Valero to increase its refining margins due to its strategic refining structure, which enables the company to use cheaper oil and stock it for a longer period. Citigroup has reaffirmed its “buy” rating on Valero stocks. Both Valero and Marathon stocks are rated as “BBB” by Moody’s and “stable” by Standard and Poor’s.
Retreat of the technology sector
Semiconductor and computer hardware stocks were impacted adversely on October 26 following their upswing on Friday, October 23. Stocks of semiconductor companies Avago Technologies (AVGO) and Skyworks Solutions (SWKS), suppliers to Apple (AAPL), slid by 4.6% and 5.6%, respectively, on October 26. This drop in the semiconductor companies’ stocks may have created a negative outlook regarding iPhone sales this recent quarter. Apple’s stocks tumbled by 3.2% ahead of its quarterly earnings on October 27. Let’s look into SPY’s industrial and real estate sectors.