Why Are Energy ETFs Bleeding



US equity indexes

On October 19–26, US equity indexes ended in the red. Last week, the Dow Jones Industrial Average (DIA), the S&P 500 (SPY) and the S&P Mid-Cap 400 (IVOO) fell 3%, 3.9%, and 4.1%, respectively. Energy stocks form ~5.2%, 5.9%, and 5.1%, respectively, of these equity indexes.

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Oil, broader market, and energy ETFs

Last week, US crude oil December futures fell 2.4%, while the Energy Select Sector SPDR ETF (XLE) fell 7.1%. XLE saw the highest fall among the SPDR ETFs that break the broad market into subsectors. The fall in oil prices and broader market indexes might be behind the fall in energy stocks. Earnings and trade war concerns might be behind the fall in the broader market. The factors that we discussed in Part 1 might have pulled oil prices.

Last week, the Real Estate Select Sector SPDR (XLRE) fell 1.1%—the lowest decline on our list.

Energy ETFs

In the week ending on October 26, major energy subsector ETFs’ price metrics were:

  • The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) fell 10.2%.
  • The VanEck Vectors Oil Services ETF (OIH) fell 9.1%.
  • The Alerian MLP ETF (AMLP) fell 6.7%.
  • The VanEck Vectors Oil Refiners ETF (CRAK) fell 5%.

The fall in US crude oil prices and the broader market might have been behind the fall in these energy ETFs last week.


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