Energy stocks lead March gains in sign of broadening market rally
March has been a strong month for the S&P 500, with energy stocks leading the way. The S&P 500 Energy Select ETF has surged more than 12%, outperforming the benchmark index’s 3% rise. This increase is fueled by a 15% climb in oil futures since the beginning of the year, with West Texas Intermediate and Brent trading around $83 and $87 per barrel, respectively.
Factors contributing to the rise in oil prices include falling inventories, drone attacks on Russian refineries, and ongoing output cuts from the OPEC+ alliance. This shift towards energy-related stocks marks a reversal from 2023, when these stocks ended the year down as oil prices fell.
This year’s gains suggest a broader market rally beyond the dominant tech stocks, with Tesla and Apple losing value. Market analysts predict a widening of the rally, with other S&P 500 companies expected to outperform the tech giants in terms of earnings growth.
Overall, the market is showing signs of diversification and a move away from the “Magnificent Seven” trade. This trend is expected to continue in the coming months, as investors seek opportunities beyond the traditional tech leaders.