After a strong return from the S&P 500 (SPY), Nasdaq (QQQ), and Russell 2000 (IWM), investors are rotating out of them. On Wednesday, Devon Energy (DVN) broke out to take another run at its 52-week high of $38.88. Before that happened, it formed a steady uptrend that began in April. DVN stock gained 5.3% to close at nearly $37.
ConocoPhillips (COP) gained 4.62% to close at $94.96 on Wednesday.
The energy stock rally may have the momentum to hold its gains this time. WTI crude prices gained nearly 2%. It benefited from the U.S. President ordering a blockade of “sanctioned oil tankers” into Venezuela. The energy sector is effectively pivoting the rally away from the Ukraine/Russia war toward tensions with Venezuela.
In the energy equipment sector, GE Vernona (GEV) sank by 10.5%. The stock joined TeraWulf (WULF), down 10.93% on Wednesday, Power Solutions (PSIX), and Constellation Energy (CEG) amid their stock decline. Investors took profits in popular technology names like Microsoft (MSFT), Alphabet (GOOGL), and Tesla (TSLA). As a result, companies that build infrastructure that provides power to AI server firms declined.
Your Takeaway
GE Vernova shares have been stuck in a tight trading range since August. Markets are unwilling to pay the premium on GEV stock, whose price/sales ratio is at 4.42 times. Should AI-related companies continue to pull back, GEV stock will fall with them.
