Energy and Raw Materials Stocks Rise

The expectation that economic growth is accompanied by rising inflation has driven energy and raw material stocks to lead the market strongly this month. Economists predict that as the US economy gradually improves, the growth rate of demand for energy and raw materials is expected to further surpass supply.

Observing the performance of S&P 500 index stocks in May, the oilfield services company Baker Hughes (BKR-US) and the largest US steelmaker Nucor (NUE-US) both led with 25% gains, and the packaging industry Product leader Sealed Air (SEE-US) also increased by 14%.

As a business cycle stock, energy and raw materials stocks are usually big winners in the economic recovery. As the U.S. economy almost returns to pre-epidemic levels in the first quarter, economists predict that the economy is expected to rebound further this season, thereby stimulating energy And the demand for raw materials, the growth rate of demand may even exceed the supply.

Although raw materials and energy stocks continued to rise this month, they did not translate into the rise of the S&P 500 index. The main reason is that the U.S. stock benchmark index weights stocks based on market capitalization, so that the stock price performance of large companies has a greater impact on the index. force.

According to the S&P Dow Jones Index, as of the end of April, the raw materials and energy sectors each accounted for 2.7% of the S&P 500 index. The technology industry, which performed well last year, accounted for nearly 27% of the index. The gap is quite significant. In addition, considering investors’ concerns about rising inflation, which may further weaken corporate profitability, growth stocks, including technology stocks, have suffered a huge blow.