S&P 500: Some cushion for the energy sector – Charles Schwab

The Energy sector’s high sensitivity to the overall market provides a macroeconomic tailwind if the rally from the March lows continues, per Charles Schwab.

Key quotes

“While we expect high volatility to continue, we think that the S&P 500 Energy sector may have put in at least an intermediate low, particularly as short-term relative strength has been positive.”

“We don’t suggest overweighting the sector at this point. The value characteristics are questionable because of the uncertainty around future earnings revisions, which is weighing on the fundamentals of the sector.”

“Energy sector has already rallied significantly from recent lows, and it is far from clear how long it will take for the oil market to rebalance supply and demand. Therefore, we are maintaining a marketperform rating on the sector for the time being.”