Tuesday, August 23, 2016

The Fallout From Rising Oil

Rising energy prices have offered good news to the shares of energy companies that have been hamstrung by plunging oil prices. In contrast, though, one sector among the S&P 500 isn’t eager to applaud the oil rally: telecommunications.

Telecom stocks have performed the worst among the S&P 500’s ten sectors since August 2, when oil prices bottomed out. According to S&P Dow Jones Indices, for every 1 percent increase in the price of oil, the telecom sector declines by two-tenths of a basis point.

The energy and materials sectors are the most obvious beneficiaries of gains in crude oil prices. More surprisingly, the technology sector also benefits: It rises an average of 21 basis points for every percentage point climb by crude.

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