Energy Sector Upgraded to Overweight by Truist

Financial company Truist upgraded its rating on the S&P 500 (SPX) Energy sector to overweight (Buy-rating equivalent) from neutral after the sector’s recent dip. Chief market strategist Keith Lerner highlighted that the sector’s performance (before its recent drop) was bolstered by a positive technical shift, marking a breakout from an 18-month trading range.

This move aligns with increasing energy prices, enhancing relative earnings and relative price trends within the sector, according to the analyst. Lerner noted that geopolitical tensions, particularly in the Middle East, continue to disrupt supply, which could further boost the sector.

Year-to-date, the S&P 500 Energy Sector has seen a notable rise, gaining over 12%. As oil prices climb due to ongoing international conflicts, the energy sector remains well-positioned for sustained growth, and there are plenty of energy ETFs out there to take advantage of this trend, including the most popular one, the Energy Select Sector SPDR Fund (NYSEARCA:XLE).

Truist also maintains an overweight rating on Communications, Information Technology, Financials, and Industrials, indicating a positive outlook for these areas as well.

Above, you can see how each S&P 500 sector ETF has performed in the past year using TipRanks’ Comparison Tool.