Rieger Report: Energy Sector Helps Drive Market

by: S&P Dow Jones Indices

By J.R. Rieger

The recent oil price rally has pushed the energy sector upward in both the equity and bond markets. In the second quarter so far, the S&P 500 Energy Index (equity) has returned over 9.1% in total return and the S&P 500 Energy Corporate Bond Index has returned over 7.3%. Meanwhile, the broader indices have seen more modest returns: the S&P 500 Bond Index (the debt of the S&P 500 companies) has returned 2.61% and the S&P 500 (TR) has returned 2.21%.

Table 1: Select indices and their quarter-to-date returns:

Click to enlarge

Source: S&P Dow Jones Indices, LLC. Data as of June 10, 2016. Table is provided for illustrative purposes. It is not possible to invest directly in an index. Past performance is no guarantee of future results.

Yields of bonds in the S&P 500 Energy Corporate Bond Index have tumbled as bond prices have rallied. At the end of March, the average yield of bonds in the index was a 5.17% and ended June 10th at a 3.95% - a 122 basis point drop. The average yields of bonds in the S&P 500 Bond Index have also fallen but only by 25 basis points during this time frame, helped in part by the inclusion of the energy bond sector.

Chart 1: Select indices and their yields (Yield to Worst):

Source: S&P Dow Jones Indices, LLC. Data as of June 10, 2016. Chart is provided for illustrative purposes. It is not possible to invest directly in an index. Past performance is no guarantee of future results.

Source: S&P Dow Jones Indices, LLC. Data as of June 10, 2016. Chart is provided for illustrative purposes. It is not possible to invest directly in an index. Past performance is no guarantee of future results.

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