Yes … it’s that time of the year again – end of year stock market performance review season. And predictions for 2017.
Which market sector outperformed all others in 2016? Knowing which sector has been hot could point to where you should invest in 2017.
Investors looking for the ‘strongest performer’ for the U.S. stock market’s price action last year need look no further than stocks in the energy sector. Yes, you heard it right.
With a market-thumping 24% return, ‘Energy’ was the top performing sector S&P sector in 2016 proving that oil is indeed alive and kicking.
The Year in Review
Oil’s 2016 journey was marked by sudden sharp sell-offs followed by swift recoveries. However, with crude’s wild ride, we saw some big winners — and big losers as well. So essentially, investors with good stock-picking skills made a lot of money, while those who bet on the wrong stocks got absolutely hammered.
By February, prices plunged all the way to a low of $26 per barrel, thanks to the boom in shale oil production and rising output from OPEC. The dramatic slide prompted several analysts to make bold calls on a potential bottom. While some suggested prices might drop as low as $20 a barrel, gloomier estimates called for a sensational $10-per-barrel floor.
But thankfully, none of these bone-chilling forecasts were correct.
A historic OPEC production cut agreement, together with help from non-OPEC producers and slashing investments (in existing and new wells) have seen oil prices more than double from their last February lows to $52.