Energy stocks are shining bright in a tough day for U.S. markets

Energy stocks are one of the rare bright spots in the stock market on Tuesday.

The S&P 500’s energy sector was surging 1.3% in the afternoon trading, making it the top performer among the large-cap benchmark index’s 11 sectors as major indexes were tumbling.

The energy sector has also taken a lead in the first five trading days of the new year, up over 3% as the best-performing sector on the S&P 500. Leading the gains were shares of Devon Energy Group, which have risen nearly 6% so far this month, while shares of Hess Corp. were up 4.6% in the same period, according to FactSet data.

“While it’s far too soon to say this is more than just a rotational bounce around the turn of the year, we continue to be impressed by the natural gas names, which are showing clear leadership,” said Jonathan Krinsky, chief market technician at BTIG.

“There has also been a strong positive correlation between interest rates and the energy sector since the inflationary impulse started in late 2021. With 10-year yields back to one-year highs, this should bode well for the energy complex,” Krinsky said in a Tuesday client note.