Too early for new Wall St leader

• IBTimes RSS
• Print
• E-Mail
• digg
• Del.icio.us

But for stocks to start a sustainable recovery, another sector would have to step up and take the baton to lead the market higher.

While over recent weeks that role has been taken on by the financial sector, analysts say these beaten-down stocks are nowhere near ready to assume that responsibility, as it is still unclear how many more write-downs banks will face while the credit crisis unfolds.

It may also be too early to count out the energy sector. Energy's plunge into a bear market has been breakneck in the past few weeks and is linked primarily to a sharp drop in the price of oil, which analysts still see at relatively high levels in the foreseeable future.

"Energy has been pretty beaten down here over the last three weeks, but I wouldn't say it's time to pass the baton just yet," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in New York.

He said a move toward oil's 200-day moving average around $110 a barrel could result in a technical bounce in the price of the oil that would lift energy and natural gas stocks anew.

"To expect that it's all over for energy and energy stocks, I think, is premature. I think we've seen more of a swing in the trade than a move based on fundamentals. We're just getting a correction in a very broad advance in the price of oil," Pado said.

Nevertheless, the S&P's financial index has staged an impressive comeback over the last month, gaining more than 28 percent since July 15 and outpacing the S&P 500 .SPX by more than 20 percent.

The S&P's energy index , meanwhile, plunged nearly 7 percent during that time frame. As of Monday, it had declined 20.5 percent from its mid-May high, meeting the 20 percent technical threshold that marks the beginning of a bear market for the sector.

Shares of Exxon Mobil Corp sank to a 16-month low of $76.60 this week, while Chevron Corp lost 20 percent of its market value during the past 11 weeks.

• 1
• 2
• 3