Tech Stocks Grab Headlines while Petroleum Stocks Quietly Rise
Everyone’s talking about Amazon and Snap (SNAP) this morning. The accolades are well deserved. Amazon is on track for the biggest one-day valuation increase in history, while Snap surged 53% today. Meanwhile Meta (FB), the company formerly known as Facebook, is well on their way to becoming the “investment that must not be named.”
Remember FAANG? Jim Cramer replaced it will MAMAA earlier this year. You can scrap them both now. Meta is not going to survive the battle for the Metaverse, no matter what they call themselves. Microsoft (MSFT) has the gaming platform. Amazon (AMZN) controls the servers. Google (GOOG) stock is splitting 20-for-1. They’re the “Big Three” in the tech world.
As for Apple (AAPL), they’ll come out a winner no matter who wins the Metaverse race. They make the devices we all connect with, including a new VR/AR headset and Apple Glasses. Does anyone really believe Oculus will be able to compete? Zuckerberg is dealing with a $250 billion loss this week after a weak earnings report. The writing on the wall is clear.
Petroleum Stocks are Rising While Tech Giants Vie for Dominance
Tech stocks are sexy and green energy grabs all the headlines in the energy sector. Meanwhile, the world is still dependent upon petroleum and prices have been rising as we emerge from the wreckage of the pandemic. Brent Crude (BNO) is up 19.35% YTD. The Bank of Montreal’s MicroSector Oil and Gas ETN (OILU) has returned 68.67% since January 1st.
If you’re looking for a small cap in this sector, check out PDC Energy Inc (PDCE). Their consensus price target, after starting the year at $52.10 in January, was $70.47. They opened this morning at $61.53, up 17.36%. On Robinhood, 87% of analysts have PDCE as a buy. Tickeron has the momentum indicator above 0 and recommends a long position or call options.
The SPDR S&P 500 ETF Trust (SPY), which is the largest ETF in the world and my go-to for taking the pulse of the market, is down 5.86% this year. ExxonMobil (XOM) is up 28.74%. Chevron (CVX) has risen 13.99%. Amazon, even with their big day yesterday, is still down 6.29% on the year, roughly the same as the overall S&P. Does that change your perspective at all?
Is Oil a Hedge Against Rate Hike Volatility this Year?
Business Insider published an article this morning titled “US stocks slide as blowout jobs report points to aggressive path of Fed rate hikes.” It’s a terrible title and an article that makes some broad (and unsubstantiated) assumptions. Reporting that the market went down because of a positive jobs report is too simplistic. It’s earnings season. Market swings are inevitable.
The BI article is postulating that the increased jobs number will cause the Fed to implement additional rate hikes, which are needed to curb inflation. If that caused the market to go down, why is oil still going up? Are petroleum stocks a hedge against rate hikes? Why not? Oil stocks are easily outperforming gold. Barrick (GOLD) is up just 3% this year.
The positive jobs report is not a surprise to me. Look around your own community. Businesses are pleading for help and raising salaries so they can get it. Meanwhile, rising inflation is creating a need for additional income. Consumers are forced to go to work if they want to survive. Many of them drive to get there. That still requires gasoline for most folks.