Energy sector versus the broader market
From September 22–29, 2016, the Energy Select Sector SPDR ETF (XLE) rose 1.6%. It was the only gainer among the SPDR ETFs that we’re covering in this part of the series. All of the other SPDR ETFs closed on a negative note during this period.
US crude oil (USO) (USL) (DWTI) (SCO) November futures rose ~3.3% from September 22–29, 2016, due to the various factors that we looked at earlier in this series. The rise in crude oil is what primarily fueled the rise in XLE.
Among the SPDR ETFs, the Utilities Select Sector SPDR ETF (XLU) fell the most. It fell ~3.2% from September 22–29, 2016. The fall in these high dividend yield stocks coincides with the market expectation of a possible rate hike in November 2016.
The above table shows XLE’s performance compared to ETFs representing other sectors. The returns of the ETFs in the above table are adjusted for dividends.
Crude oil this week
On September 30, 2016, at 1:50 AM EST, US crude oil (UWTI) (OIIL) (SCO) was trading at $47.49 per barrel—a rise of ~6.7% compared to its closing price on September 23, 2016. Crude oil will likely close on a positive note this week. From September 16–23, 2016, crude oil rose 2%.
The potential of a reversal in crude oil prices is an important factor for ETFs such as the iShares US Oil Equipment & Services ETF (IEZ), the SPDR S&P Oil & Gas Equipment & Services ETF (XES), and the Guggenheim S&P 500 Equal Weight Energy ETF (RYE).
In the final part of this series, we’ll see how crude oil and natural gas drive energy ETFs.