Markets are a little shaky right now, but there are still industries to buy.
Chris, a Money & Markets reader, emailed us asking about trending sectors, and I took the time to answer his question in our recent Ask Us Anything video.
Watch the video below or continue reading about these three industries to buy now!
In these videos, Adam O’Dell, Charles Sizemore and I tackle the questions you send us.
Last week, Chris wrote in asking where to find profits in market turmoil:
You mentioned finding opportunity in any market in one of your Ask Us Anything videos. Where should I be looking now?
That’s a great question, Chris. Thank you for asking. Here’s how we can attack this:
- We’ll look at the sectors that have had the most success in the market for 2022.
- We’ll also find top-performing industries to buy now.
Let’s get started.
How to Find Profits in Market Turmoil: Top-Performing Sectors
First we’ll look at the biggest movers in the S&P 500:
There are 11 sectors in the S&P 500, but I'll focus on the five top-performing ones.
The energy sector tops them all in gains thus far in 2022.
Rising oil costs have boosted the sector overall.
Along those lines, utilities stocks have also performed well this year.
This is due to increasing natural gas prices.
However, the Inflation Reduction Act becoming law could add to these gains as utility companies are incentivized to adopt more renewable energy production.
Consumer staples stocks are down, but have started to pick up a little steam thanks in large part to inflation and recession fears in the market.
Health care and industrials round out the five top-performing sectors of the S&P 500.
Top Industries to Buy Now
Now, let’s drill a little deeper to see what industries within the broader market have been performing the best this year:
As you can see, the oil, gas and consumable fuel market is the group's best performer.
Construction and engineering has moved higher due to construction materials’ costs ticking up.
Energy equipment and services are up, pulled along by the broader jump in the energy sector.
So let's focus on these three industries.
We'll start with oil, gas and consumable fuel:
This chart shows the Dow Jones U.S. Oil and Gas Index since the start of 2022.
We can focus more on performance from June 2022 to now.
The index reached a high in early June but pared back as broader market headwinds pushed back on stocks.
Since mid-July, the index has clawed back up 23.3% and shows signs of going higher.
Oil and gas looks like a good industry to buy now.
Let's look at construction and engineering:
The S&P 500 Construction and Engineering Index shows the industry had a strong start to the year before paring back gains in May.
It rallied back into July, then had a slight fall off at the end of the month.
Now the index is making a strong push to reach and pass its 52-week high from late July.
This indicates more strength in the industry ahead.
And last up, let's look at the energy equipment and services industry:
This chart shows the movement of the S&P 500 Energy Equipment and Services Index.
The strength in the broader energy sector buoyed the industry.
But we can see demand for equipment and services starting to taper despite continued strength in the broader sector.
This may not be an industry to buy now, but I’d keep an eye on it.
Bottom line: I would say oil, gas and consumable fuel, along with construction and engineering, are good places to look right now, Chris.
That doesn't mean other sectors and industries won’t rise in the future.
The key message is that there are ways to find profits even in market turmoil.
Thank you for asking your question, Chris.
Know that Adam, Charles, myself and our entire team are always looking for adaptable, profitable investment opportunities in any market condition.
Remember, if you have a question about the market or the economy … or really anything else … email your question to Feedback@MoneyandMarkets.com!
Until next time,
Matt Clark, CMSA®
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He’s the host of our podcast, The Stock Power Podcast, as well as the Marijuana Market Update. He’s also a certified Capital Markets and Securities Analyst through the Corporate Finance Institute. Before joining the team, he spent 25 years as an investigative journalist and editor — covering everything from politics to business.