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XLE Tops August Sector Rankings as Energy Stocks Surge

BY | ETF Database
5:41 am ET 09/02/26 | 9 VIEWS
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The State Street Energy Select Sector SPDR ETF (XLE A) gained 7.4% in August, according to State Street. That was the best performance among the 11 Select Sector SPDR funds that track the S&P 500. Oil and gas stocks powered the advance as crude prices rebounded through the month.Key Takeaways: XLE gained 7.41% in August, topping every other S&P 500 sector fund. Oilfield-services and refining names like SLB and Marathon Petroleum led the advance. Geopolitical risk still keeps $5 to $10 a barrel priced into oil. The rally comes as renewed U.S.-Iran tension threatens to disrupt oil supply again, according to Morningstar’s equity research team. A ceasefire agreement reached earlier this summer had eased supply fears and pushed crude prices lower. However, hostilities have escalated since the 60-day deadline for a U.S.-Iran memorandum of understanding expired in mid-August. See more: Energy Volatility Fuels 20% Yield for This ETF Oilfield-services and refining stocks led the fund higher, State Street data showed. SLB (SLB), for instance, climbed 21.2% for the month, while Marathon Petroleum Corp. (MPC) added nearly 18% and Phillips 66 (PSX) rose 16.5%. The advance wasn’t limited to the fund’s biggest gainers. Apache Corp. (APA) climbed 15.6%, Valero Energy Corp. (VLO) added 14.7%, and Halliburton Co. (HAL) rose 14.3%, per State Street. State Street’s holdings data show Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) remain the fund’s two largest positions, together accounting for nearly 35% of the portfolio. Even so, their gains were more modest by comparison, with Exxon rising 3.5% and Chevron adding 4.7% in August. XLE holds 21 stocks and carries a 0.08% expense ratio, according to the fund’s factsheet. Since its December 16, 1998, inception, the fund has grown to $41.4 billion in assets under management, as of August 31.What's Fueling XLE's August RallyMorningstar’s equity research team said the North American energy sector now looks fairly valued. Its global energy coverage trades at roughly a 1% premium to fair value, down from overvalued levels last quarter. That shift means prices have cooled to more reasonable levels across the sector. That doesn’t mean the risk has fully passed, according to Morningstar. Questions still linger over who controls the Strait of Hormuz and whether ships must pay tolls to pass through it. Those questions could keep $5 to $10 a barrel of extra risk priced into oil for some time. That risk premium cuts both ways for a fund like XLE. If tensions eventually ease and supply fully returns, Morningstar said the market could tip into oversupply. That could pull oil prices, and the energy stocks that track them, back down. One of those holdings, Devon Energy Corp. (DVN), is also on Morningstar’s list of top-rated energy stocks. The firm points to cost savings from Devon’s recent merger with Coterra and its record of returning cash to shareholders. Devon gained 7.5% in August, State Street data showed, roughly in line with the sector’s overall advance. For more news, information, and analysis, visit our Sector Investing Content Hub.

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