Benzinga - Technology stocks have taken huge revenge on energy in recent months, with the performance difference between the Technology Select Sector SPDR Fund (ARCA: XLK) and the Energy Select Sector SPDR Fund (ARCA: XLE) climbing to 27% year-to-date and 42%, respectively, from November 2022 lows.
The two primary factors driving this trend have been increased expectations on a Federal Reserve policy rate peaking, as dropping Treasury rates brought much-needed relief to tech assets and significant losses in oil prices caused by recessionary worries which have intensified since the U.S. banking crisis.
After rising over 350% in the two years before August 2020, and more than 1,300% from 2008 to the summer of 2020, the tech-energy relative stock performance ended 2022 with a nightmarish loss of about 55%.
Essentially, the year 2022 alone has wiped out more than half of the gains experienced by tech equities over energy between the Lehman Brothers crisis in 2008 and COVID-19 in 2020.
Chart: Technology vs. Energy Equities (XLK/XLE)
How Did Tech Outperform Energy Year To Date? In 2023, about 80% of the excellent performance of the technology sector Invesco QQQ Trust Series 1 (NASDAQ: QQQ), up 22% year-to-date, was attributable to only four companies.
- Apple Inc (NASDAQ: AAPL) was QQQ's biggest performance contributor in 2023, adding alone 7.4 percentage points to the overall performance.
- Microsoft Corp. (NASDAQ: MSFT) added 6.7 percentage points to the overall performance.
- NVIDIA Corporation (NASDAQ: NVDA) contributed 2.8 percentage points.
- Salesforce Inc (NASDAQ: CRM) contributed for 1 percentage points.
- Exxon Mobil Corp (NYSE: XOM) and Coterra Energy Inc (NYSE: CTRA) are the only two firms in the energy field that have contributed positively to the total performance of the sector. The rest of the companies in the energy industry have seen negative returns so far this year.
- Chevron Corp. (NYSE: CVX) was the worst performer in the sector, alone dragging down the XLE by two percentage points; ConocoPhillips (NYSE: COP) and Halliburton Company (NYSE: HAL) were also notable laggards, dragging 0.6 percentage points each.
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