Oil and energy industries represent the biggest market winners in the S&P 500 so far this year, whilst tech companies struggle to hold their ground.
The first two quarters of the year were met with social unrest, with various issues around the world, including the conflict between Ukraine and Russia, fuel shortages and a cost of living crisis. Effects of such world events on the stock market vary from country to country and some industries have fared better than others.
Energy prices have surged in recent months and the demand for crude oil remains high despite the difficulties facing the supply chain.
So which S&P 500 companies have been performing well?
Occidental Petroleum [NYSE:OXY], is an American hydrocarbon exploration company that has benefitted from the price hikes and demand surge with a 113.6% increase. Warren Buffett also recently acquired just under seven million more OXY stocks, which could have also had an effect on the price increase.
Coterra Energy [NYSE:CTRA] and Hess [NYSE:HES] have both seen an increase of 41.71% and 65.84% in their share prices respectively. Earnings for both companies reached new heights in the first half of 2022 as they both benefitted from the fuel crisis. As well as this, some oil and gas companies boast impressive dividend payments which could have made them increasingly attractive to shareholders.
Solar panels and batteries for residential properties have been in high demand since the announcement of rising energy bills throughout Europe. Enphase Energy [NasdaqGM:ENPH] has experienced an extraordinary sales year so far with European sales up almost 70% in the second quarter.
Upstream oil companies like ExxonMobil [NYSE:XOM] benefited greatly from the crude oil price hike during the first half of the year.
Michael Hewson, Chief Market Analyst at CMC Markets said: “After a few turbulent years in the market due to COVID-19 many stocks on the market were negatively impacted, whilst others thrived during periods of social unrest. It’s clear that these energy stocks are performing really well, as a direct result of what has been happening around the world over the last eight months. However, because of this, it is not unlikely that these percentages will experience a drop-off by this time next year.”
Tech stocks taking a pounding in 2022
After the pandemic boom, many tech companies have struggled to get out of the slump since life returned to normal. One of the companies that exemplify this is Netflix [NASDAQ:NFLX]. It is one of the biggest losers in the S&P 500 so far this year with a steep 51.2% drop. With the number of people staying at home having decreased since the pandemic, Netflix has found it difficult to retain and recruit customers.
The technology company also announced that it was raising its monthly subscription prices in April of this year. This caused a stir on social media and could have been another contributing factor to this price dip.
Another big loser so far in 2022 is clear aligners manufacturer, Align Technology [NASDAQ:ALGN] with a dip of 65.56%. CEO Joe Hogan alluded to the fact that customers may choose to cut back on certain luxuries like discretionary health products during times of hardship. This could explain the drop in the stock price as well as a dip in sales figures for 2022 so far.
British-American cruise operator Carnival Corporation [NYSE:CCL] has recorded a 60.41% drop in its share price in 2022. Like many other industries, the cruise ship industry took a massive hit during COVID, and has been unable to recover because of excruciating debts.
PayPal’s [NASDAQ:PYPL] former CFO, John Rainey, announced that he would join Walmart in June. It is not uncommon for stocks to drop when key figures leave the company, this is because the possible threat to stability. PayPal stock is currently down 54% at time of writing on a YTD basis.
Facebook [NASDAQ:META] aka Meta Platforms, saw a decline in its active daily users for the first time in its history this year. The rise of other social media platforms such as TikTok could be responsible for this inactivity. META is down a horrific 59% YTD.
“On the other side of the coin, tech companies like Netflix that flourished during the pandemic are starting to see the effects of dwindling demand,” observed CMC’s Hewson. “People are back to travelling, socialising and commuting now, and this would definitely have had an effect on the stock price for certain companies.”