Contrary to 2021, when equity markets were in a bull run, 2022 has served as a not-so-gentle reminder that the stock market does not give free gifts. The macro attitude that is pushing the markets lower has been influenced by worries about a recession, geopolitical tensions, the energy crisis, and record inflation.
Still, with a strong labor market, and rising wages for workers to defend themselves against a recession; Federal Reserve chairman Jerome Powell reminded Americans at the annual Jackson Hole Symposium last week that the Fed is committed to bringing inflation down to its target 2% rate — even at the cost of causing some pain to households and businesses along the way.
Powell shattered the "Fed Pivot" narrative in less than 10 minutes, jolting the markets. The Nasdaq fell 3.94%, the S&P 500 dropped 3.37%, and the Dow Jones Industrial Average dropped 3.03% before the end of trading, making August 26th the worst day for the markets since June 12th.
Read more: This Energy Company Earned More Than Apple (NASDAQ:AAPL), Meta, Microsoft (NASDAQ:MSFT) And Tesla Combined In Q2
According to Pete Najarian’s MarketRebellion, 494 of the S&P 500 stocks closed in the red following the chairman's speech at Jackson Hole, only 5 stocks closed in the green, and one stock — Nielsen Holdings Plc (NYSE: NLSN) — closed flat.
An investor may be wondering where to secure their capital throughout the protracted downturn while the macroeconomic environment stays on the defensive side; the answer seems obvious: energy.
Energy beat all other S&P 500 sectors, dropping only 1.17% for the week. Despite finishing down on Friday, Energy has continued to be the year's biggest winner, returning 51% overall compared to utilities, the second-best sector, which has returned only 5.6% so far in 2022.
Read more: Hunting (LON:HTG) For Dividend Yield In Utilities? This Small Cap Name Can Light Up Your Portfolio
In addition to a 50% increase between January 2020 and December 2021, WorldBankBlogs reports that the energy price index of the World Bank grew by 26.3% between January and April 2022.
The substantial increase in the prices of coal, oil, and natural gas are reflected in this spike. The nominal increase in crude oil prices from April 2020 to April 2022 was 305%, which is the highest increase for any comparable two-year period since the 1970s.
In the meantime, nominal prices for gas and coal have all risen to historic highs. It should be noted that only European natural gas prices have risen to record highs and continue to be significantly higher than their last peak in 2008. While oil prices are still below average, coal prices are very near to their 2008 peak.
Check out Benzinga's crude oil futures page.
The average price of energy commodities is now anticipated to increase by 46% in 2023 compared to predictions made in January 2022.
Here are some low-float energy names that have made big moves, and may have more room to run if heavy buying volume comes in:
PrimeEnergy Corp (NASDAQ: PNRG)
NCS Multistage Holdings Inc (NASDAQ: NCSM)
Mexco Energy Corp (NYSE: MXC)
CKX Lands Inc (NYSE: CKX)
Indonesia Energy Corp Ltd (NYSE: INDO)
The following dependable energy companies offer investors peace of mind that their capital is secure:
Valero Energy (NYSE: NYSE:VLO)
ConocoPhillips (NYSE: NYSE:COP)
Schlumberger NV (NYSE: NYSE:SLB)
Occidental Petroleum Corporation (NYSE: NYSE:OXY)
Exxon Mobil Corp (NYSE: NYSE:XOM)
Here are some short squeeze energy candidates that could go for a wild ride:
Vertex (NASDAQ:VRTX) Energy Inc (NASDAQ: VTNR)
Chesapeake Energy Ord Shs (NASDAQ: CHK)
CNX Resources Corp (NYSE: CNX)
Gevo Inc (NASDAQ: GEVO)
Centennial Resource Development Inc (NASDAQ: CDEV)
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