Energy markets have taken the lead in the current bull run, outperforming technology sectors. The Energy Select Sector SPDR Fund (XLE) is up 53.3% year‑to‑date, more than three times the S&P 500’s 15% gain, while the Technology Select Sector SPDR Fund (XLK) remains up 36.8%. Recent September CPI data showing 3.7% inflation pushed bond yields higher, creating headwinds for long‑duration growth stocks and reinforcing energy’s momentum. The 10‑year Treasury yield’s real component has hit new highs, while expected inflation remains modest, a dynamic that closely tracks crude oil price movements. WTI crude is consolidating in a tight range between support near $90 and resistance in the low $100s, a pattern that should set the tone for the broader energy complex.
The diesel crack spread widened from about $25 per barrel in January to a peak above $110 in September before easing to roughly $95, highlighting strong refining margins. The VanEck Oil Refiners ETF remains near its recent highs, underscoring the attractiveness of the refining sector. Accordingly, we have re‑entered Marathon Petroleum (MPC) in our portfolio; the stock has risen from a 2020 low to around $477, well above its 200‑week moving average, with potential upside toward $600‑$650.
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