History Says Energy Led All Sectors in the Last Bear Market. Here's What's Different Now.
Energy stocks have delivered exceptional gains in 2026, but a surprising shift in the oil market could change the outlook for investors.
Energy stocks dominated the 2022 bear market, with S&P 500 energy stocks delivering a 65.7% return against an 18.1% loss for the broader index. In 2026, energy stocks are again leading, up 42% year-to-date, compared to a 12% gain for the S&P 500. The rally has been fueled by Middle East supply disruptions and high refining margins, but a global recovery could pressure profits.
ExxonMobil and Chevron both reported record earnings in 2022, returning billions to shareholders. However, April 2025 saw energy stocks underperform as tariffs and economic concerns weighed on the sector. The EIA projects global liquid-fuel production to fall short of consumption by 1.3 million barrels per day in 2026, but could exceed it by 5 million barrels per day in 2027.
This swing could put downward pressure on oil prices. While S&P 500 energy stocks trade at a lower valuation than the broader market, earnings are expected to decline in 2027. Energy investors should be cautious about aggressive buying, as a recovery in oil supplies could weaken earnings despite a strong broader market.
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