Tuesday's Market Minute: What This Year's Best (& Worst) Performers Signal So Far

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Monday’s closing bell marks the 93rd trading session of 2022, meaning 158 to go. A lot could change in the back half of 2022, and on the bright side, the year is less than 40% over. But with the overall market deterioration and ongoing geopolitical woes, investors have tirelessly been hunting for more defensive, resilient strategies. This has clearly proved to be a less-than-simple task.
So far in 2022, energy has fueled most of the strength within the S&P 500. Leading the pack is Occidental Petroleum, up 133% YTD through Monday’s close. Shares closed over 5.6% higher on news of a regulatory filing that stated Berkshire Hathaway bought an additional 901,768 shares of the stock. Since Warren Buffett’s buying spree began back in February, Occidental is now one of the company’s top 10 holdings.

Occidental is currently the crown jewel of the S&P 500 on a year-to-date performance basis, nearly doubling the gains of its the fellow leader, Marathon Oil, which is up 70% YTD. Valero Energy, Halliburton, Devon Energy, and Coterra Energy are the index’s next best, all gaining 60% or greater on a year-to-date basis. The S&P 500 sector performance only further illustrates energy’s domination, with the sector rising a whopping 48.6% through Monday’s close. The only other sector gaining this year thus far is consumer staples, and by a mere 0.13%. 
The index’s greatest laggards are less thematic – and perhaps more puzzling. Netflix has fallen the hardest, down 69% YTD, followed by Etsy, PayPal, Align Technology, and EPAM Systems, all shedding 53% or greater. This better depicts the rest of the market’s disorder outside of energy. Communication services, information technology, consumer discretionary, and health care have all taken a beating, with the consumer discretionary sector falling the greatest of the bunch – down 27.8% YTD. What is also intriguing about the worst performers is that they can’t collectively be flagged solely as “pandemic winners”.

After seeing exuberance flood the at-home stocks, like Zoom Video, Peloton, and big tech, it would seem reasonable that those suffering the steepest losses are those hit hardest by a return to normalcy. But each of these companies had established a business model that was profitable prior to the pandemic, and yet PayPal and Netflix are now trading below March 2019 levels. The S&P 500’s losers portray the unrelenting and unpredictable selling transpiring, and we still have 60% of 2022 to go.

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This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.