The two largest U.S. oil companies by market value are both lower by more than 7% to start 2020 as oil has slipped into a bear market. Add to that, the energy sector's weight in the S&P 500 has dipped below 4%, putting it in danger of dropping below utilities as the third-smallest sector in the benchmark U.S. equity gauge.
Though the stocks are beaten up, they remain marquee parts of some well-known exchange traded funds that could be worth monitoring today.
Energy Select Sector SPDR (XLE)
The Energy Select Sector SPDR (NYSE: XLE) allocates 43% of its weight to Exxon and Chevron, so it's safe to say today is a big day on the earnings front for the largest energy ETF by assets.
XLE could use a pick-me-up because the fund has overshot the 2020 losses of its two largest holdings, slumping 8.13% while undoing all of the good work it did in December.
Perhaps not surprisingly, investors have already yanked nearly $164 million to start 2020.
Fidelity MSCI Energy Index ETF (FENY)
Like XLE, the Fidelity MSCI Energy Index ETF (NYSE: FENY) is a cap-weighted fund, meaning it has significant exposure to Exxon Mobil and Chevron. In this case, the fund's weight to those oil giants is north of 40%.
If there is good news in the energy patch, it's that companies are becoming better at managing balance sheet and delivering more rewards to shareholders.
“A growing number of energy companies are becoming more disciplined stewards of their businesses, reducing capital spending, and lowering expenses,” according to Fidelity. “They're more focused on profitability, with many generating positive free cash flow (FCF). And they're using that cash in shareholder-friendly endeavors, such as buying back their own stock and increasing their dividend payouts.”
VanEck Vectors Oil Refiners ETF (CRAK)
Stepping away from the integrated oil space, the VanEck Vectors Oil Refiners ETF (NYSE: CRAK) has an earnings test of its own to contend with today in the form of Phillips 66 (NYSE: PSX). That's significant for CRAK because that stock is the fund's largest holding at 7.71% of its weight.
CRAK follows the MVIS Global Oil Refiners Index, “which is a rules-based, modified capitalization weighted index intended to give investors a means of tracking the overall performance of companies involved in crude oil refining which may include: gasoline, diesel, jet fuel, fuel oil, naphtha, and other petrochemicals,” according to VanEck.
CRAK is lower by almost 9% this month.