Energy Sector Goes From S&P 500’s ‘Worst to First’ in 2025 Start

Gaining despite Wall Street’s dim outlook for oil and gas stocks

Energy is the star sector of the S&P 500 index in the early days of 2025, shaking off two consecutive years when it was a market laggard, and gaining despite Wall Street’s dim outlook for oil and gas stocks.

The S&P 500 Energy Index has gained 2.2 per cent this year, leading the S&P 500’s 11 sectors and outpacing the index’s 0.4 per cent rise.BTIG analyst Jonathan Krinsky said in a note that the energy sector has gone from “worst to first” thanks to notable strength in natural gas stocks, which are “showing clear leadership” as the commodity’s price bounces off multiyear lows. The First Trust Natural Gas ETF has climbed 3.8 per cent so far in 2025, posting stronger gains than the S&P 500’s broader energy gauge.
The moves mark a sharp reversal from the last two years, when, Krinsky notes, energy was “the only sector that was red” through 2023 and 2024, a stretch when the S&P 500 gained 53 per cent.The early gains have come even as Wall Street sours on the outlook for oil and gas stocks.

RBC Capital Markets on Wednesday downgraded the sector to market weight from overweight, with head of U.S. equity strategy research Lori Calvasina saying the bank’s analysts “have the most pessimistic assessment for energy at the global sector level.”

Bloomberg

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