Content and data provided by various third parties and Fidelity − Terms of Use | Help/Glossary
Research > ETFs > ETF / ETP Commentary > 

Inside the Gift and the Curse of the Energy Sector

BY | ETF Database
7:21 am ET 08/10/26 | 4 VIEWS
Don’t worry. The “curse” largely boils down to Iran War’s impact on renewable energy stocks. On the other hand, the conflict has been a gift to traditional fossil fuels equities, explaining why the energy sector is the best-performing group in the S&P 500 this year.Indeed, the war and related headlines put a spotlight on oil equities and ETFs such as the Direxion Daily Energy Bull 2X ETF (ERX A-) and the Direxion Daily Energy Bear 2X ETF (ERY A-). Traders that have tapped ERX and ERY at various points this year know that one day oil prices are surging. These can be rapidly followed up by declining crude prices at the hands of peace deal talks. “While almost all companies in the sector will benefit, relative performance within the energy sector will depend to an extent on the outcome of the conflict and the impact on the various commodities,” noted research firm Berenberg in a recent note. The aforementioned and bullish ERX attempts to deliver 200% of the daily returns of the S&P Energy Select Sector Index while the bearish ERY seeks daily returns corresponding to 200% of the daily inverse performance of that gauge. Said another way, both ETFs are credible for short-term views on what comes next in Iran.Getting Things ‘Strait’ with ERX, ERYERX and ERY are not direct plays on crude futures. However, there’s escaping the fact that equities such as Exxon Mobil (XOM) and Chevron (CVX) – two major components in the index tracked by the Direxion ETFs – are surging this year due in large part to the war in Iran. Volatility surrounding the Strait of Hormuz is driving oil prices higher. That situation is tenuous, often shifting on a day-to-day basis. This indicates that both ERX and ERY remain relevant to tactical traders over the near-term. “The critical waterway carried around a fifth of the world’s oil and liquefied natural gas before the war. The emerging deal is likely to centre on an agreement between Iran and Oman to establish designated safe shipping lanes through the strait, which separates the two countries,” reported Reuters. “The optimism surrounding the June 17 deal proved largely unfounded after renewed fighting. The market’s hope today is arguably even more questionable. In the past two months, Iran’s hand has strengthened, global refining capacity has shrunk, inventories have been depleted and the number of potentially vulnerable chokepoints has risen.” Some speculate that even if the Strait reopens, not enough oil would come to market to materially affect prices. Given this, headlines about the Strait reopening may not punish ERX. For more news, information, and analysis, visit the Leveraged & Inverse Content Hub.

More Commentary

Income Over Outcome: How Active Derivative ETFs Are Winning Advisor Portfolios
BY | ETF Database
4:54 am ET 08/10/26 | 29 VIEWS
A Real Opportunity For Real Estate: XLRE's Investment Case
BY | ETF Database
7:43 am ET 08/10/26 | 6 VIEWS
Broad Market Momentum & Defensive Pivots: This Weeks Top ETF Flows
BY | ETF Database
08/07/2026 | 63 VIEWS
View more Commentary

Search Commentary

Enter Keyword(s)
Filter Results

Performance data shown is past performance and is no guarantee of future results. Current performance may be higher or lower than the performance data quoted. Yield and return will vary, therefore you have a gain or loss when you sell your shares. For standard quarterly performance, go to the fund's Snapshot page by clicking on the ETF/ETP's symbol.

ETFs may trade at a premium or discount to their NAV and are subject to the market fluctuations of their underlying investments.

For iShares ETFs, Fidelity receives compensation from the ETF sponsor and/or its affiliates in connection with an exclusive long-term marketing program that includes promotion of iShares ETFs and inclusion of iShares funds in certain FBS platforms and investment programs. Please note, this security will not be marginable for 30 days from the settlement date, at which time it will automatically become eligible for margin collateral. Additional information about the sources, amounts, and terms of compensation can be found in the ETF's prospectus and related documents. Fidelity may add or waive commissions on ETFs without prior notice. BlackRock and iShares are registered trademarks of BlackRock, Inc. and its affiliates.

FBS receives compensation from the fund's advisor or its affiliates in connection with a marketing program that includes the promotion of this security and other ETFs to customers ("Marketing Program"). The Marketing Program creates incentives for FBS to encourage the purchase of certain ETFs. Additional information about the sources, amounts, and terms of compensation is in the ETF's prospectus and related documents. Please note that this security will not be marginable for 30 days from the settlement date, at which time it will automatically become eligible for margin collateral.

News, commentary (including "Related Symbols") and events are from third-party sources unaffiliated with Fidelity. Fidelity does not endorse or adopt their content. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use.

Any data, charts and other information provided on this page are intended to help self-directed investors evaluate exchange traded products (ETPs), including, but limited to exchange traded funds (ETFs) and exchange traded notes (ETNs). Criteria and inputs entered, including the choice to make ETP comparisons, are at the sole discretion of the user and are solely for the convenience of the user. Analyst opinions, ratings and reports are provided by third-parties unaffiliated with Fidelity. All information supplied or obtained from this page is for informational purposes only and should not be considered investment advice or guidance, an offer of or a solicitation of an offer to buy or sell a particular security, or a recommendation or endorsement by Fidelity of any security or investment strategy. Fidelity does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating ETPs. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use. Determine which securities are right for you based on your investment objectives, risk tolerance, financial situation and other individual factors and re-evaluate them on a periodic basis.

Before investing in any exchange traded product, you should consider its investment objective, risks, charges and expenses. Contact Fidelity for a prospectus, offering circular or, if available, a summary prospectus containing this information. Read it carefully.