After yet another volatile week of energy price fluctuations, it appears that crude oil is gearing up to play the role of stock-market cavalry. As sectors such as retailing and financial services struggle, the rebounding energy patch just might rescue investors.
GAP last week reported that comparable sales for March 2016 were down 6%, compared to a 2% increase last year. GAP shares plunged a staggering 13.84% on Friday and have declined nearly 20% over the past five days, presaging more troubles ahead for a slowing retailing sector.
Another major retailer, L Brands, which operates Victoria’s Secret Lingerie, PINK and Victoria’s Secret Beauty segments, fell 4.34% on Friday after the company announced that Victoria’s Secret would slash 200 jobs and restructure.
Over the past five days, Macy’s has tumbled 7.61%, and the SPDR S&P Retail ETF has fallen 5.14%. Retail is now home to some of the most vulnerable stocks on the market, as the American consumer starts to tighten the purse strings.
However, energy prices appear to be on an upward trajectory, helping lift investor spirits. Whether the momentum lasts will become clearer this week, as key earnings and economic reports are unveiled.
Oil prices rose about 7% last week. Major energy stocks that have been beleaguered all year posted the following gains over the past five days: Devon Energy (9.36%), Murphy Oil (5.59%), ConocoPhillips (4.4%), and Chevron (2.16%).
Several banking giants are scheduled to report operating results this week. The entire financial services sector has been under extreme pressure lately. The Financial Select Sector SPDR ETF has declined 3.16% over the past five days and 7.47% year to date.
Тhe forthcoming salvo of earnings scorecards from major banks and retailers will provide clues not only to the financial health of individual companies but also to the overall economy.