Energy stocks are diverging sharply from the rest of the U.S. equity market as oil prices surge following the outbreak of conflict in Iran — a pattern investors haven’t seen since the 2022 Russian invasion of Ukraine.
Five days into the conflict, the broader market has absorbed the geopolitical shock surprisingly well. The SPDR S&P 500 ETF Trust (NYSE:SPY) is down only about 1% for the week.
But beneath the surface, something relevant is happening.
Wall Street is splitting into two camps: industries that produce energy and those that consume it.
The performance divergence is widening quickly.
Oil Prices Surge On Strait Of Hormuz Disruption
Oil prices have jumped roughly 18% this week, climbing toward $80 per barrel as shipping disruptions around the Strait of Hormuz threaten global crude flows.
The Strait is one of the world’s most critical energy chokepoints, handling nearly 20% of global oil shipments.
Any threat to that corridor forces traders to rapidly price in tighter supply.
That shift is now cascading through equity markets.
Oil prices are rising primarily because potential disruptions to tanker traffic through the Strait of Hormuz are tightening expectations for global crude supply.
Energy: The Only Sector In The Green
According to CountryETFTracker data, the Energy Select Sector SPDR Fund (NYSE:XLE) is currently the only S&P 500 sector trading higher this week, rising 0.7%.
All ten other sectors are in the red.
Energy-sensitive sectors are suffering the most.
The …
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