Every sector in the S&P 500 is in the red this month. Every sector except one: energy.
Recall how, in 2022, it took Russia’s invasion of Ukraine to break the stock market. An energy shock. An inflation surge. A Federal Reserve that had no choice but to hike — and keep hiking.
Today, the Iran war reproduced every ingredient of that playbook in 21 days.
Oil spiking above $100. Rate hike odds surging. And the same brutal lesson the market learned the hard way in 2022 is now visible in the charts again: when energy wins, everything else loses.
The Breadth Signal That Should Worry Every Investor
The most revealing read on where the stock market actually stands 21 days after the start of the is not the S&P 500 cap-weighted index — dominated by a handful of mega-cap tech stocks that can mask the decline underneath.
It is the equal-weight version, where every company counts equally.
The Invesco S&P 500 Equal Weight ETF (NYSE:RSP) is down 7% month-to-date through Mar. 20 — its worst monthly performance since September 2022.
That was the month the Federal Reserve raised rates by 75 basis points for the third consecutive time and signaled it would keep tightening until inflation was broken.
When the RSP falls 7%, it means the average S&P 500 stock has lost nearly 7% this month.
This Is The 2022 Script In Motion
Both episodes share the same anatomy: an energy supply shock that investors initially dismissed as transitory, a inflation print that proved them wrong, and a Federal Reserve that found itself caught between an inflation mandate and a slowing economy.
In 2022, the S&P 500 — as tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY) — fell 19.4% for the year as the Fed’s aggressive tightening cycle crushed equity valuations across all sectors. The hardest-hit sectors were the most rate-sensitive: technology, real estate, and consumer discretionary.
The only winner, then as now, was energy.
The rotation signal that paid off in 2022 is flashing again.
The S&P 500 Sector Scorecard: 10 Sectors Down, Only Energy Is Up
The month-to-date sector performance chart illustrates this divergence.
| Sector ETF | MTD Return Through Mar. 20 |
|---|---|
| Energy Select Sector SPDR Fund (NYSE:XLE) | +7.07% |
| Technology Select Sector SPDR Fund (NYSE:XLK) | −2.50% |
| Financial Select Sector SPDR Fund (NYSE:XLF) | −4.61% |
| Communication Services Select Sector SPDR Fund (NYSE:XLC) | −4.95% |
| Utilities Select Sector SPDR Fund (NYSE:XLU) | −5.25% |
| SPDR S&P 500 ETF Trust (NYSE:SPY) | −5.38% |
| Real Estate Select Sector SPDR Fund (NYSE:XLRE) | −6.42% |
| Consumer Discretionary Select Sector SPDR Fund (NYSE:XLY) | −7.70% |
| Industrial Select Sector SPDR Fund (NYSE:XLI) | −8.88% |
| Health Care Select Sector SPDR Fund (NYSE:XLV) | −9.23% |
| Consumer Staples Select Sector SPDR Fund (NYSE:XLP) | −9.33% |
| Materials Select Sector SPDR Fund (NYSE:XLB) | −11.97% |
10 Oil Stocks Thrive Amid War
When compared to the equal-weight S&P 500, there is a 14 percentage-point difference in the month-to-date performance — the widest gap since January 2022.
Inside the energy sector’s 7% monthly gain, 10 oil and gas stocks have posted double-digit returns since the war in Iran began.
| Company | MTD Return | Market Cap |
|---|---|---|
| APA Corporation (NASDAQ:APA) | +28.41% | $11.90B |
| Marathon Petroleum Corp. (NYSE:MPC) | +18.55% | $59.76B |
| Valero Energy Corp. (NYSE:VLO) | +18.36% | $62.55B |
| Occidental Petroleum Corp. (NYSE:OXY) | +14.81% | $51.91B |
| Phillips 66 (NYSE:PSX) | +14.78% | $61.31B |
| Devon Energy Corp. (NYSE:DVN) | +12.76% | $26.28B |
| EOG Resources Inc. (NYSE:EOG) | +12.35% | $64.59B |
| ConocoPhillips (NYSE:COP) | +11.88% | $133.99B |
| Coterra Energy Inc. (NASDAQ:CTRA) | +11.86% | $22.44B |
| Diamondback Energy Inc. (NASDAQ:FANG) | +11.12% | $46.99B |
While APA Corporation leads the group with a 28.41% return month-to-date — refiners dominate the top of the leaderboard: Marathon Petroleum and Valero Energy, up 18.55% and 18.36% respectively, are capturing the widening spread between crude input costs and refined product prices as retail diesel approaches $5.10 nationally while gasoline nears $4 milestone.
The presence of both upstream producers and downstream refiners at the top of the leaderboard is significant. In early 2022, refiners initially lagged as investors bet on a quick resolution.
This time, the refiner rally is happening simultaneously with the upstream surge — a signal that the market is pricing a deeper and longer disruption from the outset.
Image: Shutterstock
Login to comment