Energy stocks & Sector Data Following August

Opinion: Energy stocks, after rebounding from the mini-crash, are still poised for big gains 

The S&P 500 Index SPX, -0.64%  of the largest U.S. stocks dropped 11.1% (with dividends reinvested) in August’s mini-crash from the close of trading Aug. 17 through Aug. 25. Since then, the benchmark has come roaring back, gaining 13.1% from the close on Aug. 25 through Monday.


And here’s how the 10 sectors of the S&P 500 fared during the August correction and the subsequent rebound:

S&P 500 sector	Total return - Aug. 17 through Aug. 25	Total return - Aug. 25 through Nov. 2	Total return - 2015	Total return - 3 years
Energy	-14.5%	19.4%	-12.3%	4.0%
Information Technology	-12.1%	18.7%	7.2%	68.8%
Financials	-12.0%	10.4%	-1.2%	61.9%
Materials	-11.5%	12.8%	-6.3%	34.4%
Health Care	-10.9%	7.7%	6.3%	91.0%
Industrials	-10.4%	13.7%	-2.0%	59.1%
Consumer Discretionary	-10.2%	15.0%	12.6%	83.6%
Consumer Staples	-9.1%	10.8%	3.1%	54.2%
Utilities	-8.3%	5.3%	-7.4%	35.7%
Telecommunications Services	-8.1%	8.7%	-1.9%	15.6%
S&P 500 Index	-11.1%	13.1%	3.9%	58.5%
Source: FactSet

During the six-session decline from the close on Aug. 17 through Aug. 25, the energy and information-technology sectors fared worst, but they’ve beaten all other sectors since Aug. 25, outweighing, by far, what was lost during the summer turbulence.
If you move one lower on the list, you can see that the financial sector hadn’t yet made up what it lost, at least through Monday. The relative weakness of financial stocks during the recovery likely reflects disappointment that the Federal Open Market Committee decided to wait before raising the federal funds rate, which has been locked in a range of zero to 0.25% since late 2008. Most banks are positioned for rising net interest margins, once interest rates begin rising.
The S&P 500 information-technology sector is trading for 16.5 times weighted aggregate average earnings estimates among analysts polled by FactSet. That’s up from forward P/E ratios of 15.3 a year ago and 13.5 two years ago. So it doesn’t appear to be a time for bargains among tech stocks.
Here’s a roundup of expected earnings and sales growth among all 10 S&P 500 sectors.

Energy

So what’s going on with the energy sector? West Texas crude oil for December delivery CLZ5, -2.24%  closed at $46.14 a barrel Monday, up 14% from the close on Aug. 25. During periods of weak prices for energy commodities, there have always been investors who scooped up stocks of stronger producers on the cheap to make a killing when the market recovered.
That begs the question of how long an investor is prepared to wait for this sort of bet to pay off.