If you had been asked at any time over the past few years what the best-performing investments on Wall Street were, the answer might have included technology stocks, growth stocks, the “Big Seven,” and maybe even Bitcoin (Cryptocurrency: BTC).
In 2026, the environment has changed. So far this year (through February 4), all these categories are in the red. this S&P 500 Index (SNPINDEX:^GSPC) Performance isn’t much better, but there are a number of different industries that are now doing significantly better than the index. That’s a big change from what we’ve seen in recent years.
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Cyclical stocks and certain defensive sectors have performed particularly well this year. Materials stocks have recovered sharply, up 14% this year. Industrial stocks rose about 9%. Even the long-forgotten consumer staples sector is up nearly 12%.
But none of them performed as well as energy stocks. this Vanguard Energy ETF (NYSE: VDE) That number has grown by an impressive 16% so far in 2026.
Several factors contribute to this situation.
Overall, investor risk appetite is different than in the past. OPEC+ still strictly controls global oil production levels. But geopolitical tensions appear to be the main driver here.
Tariffs and trade friction have the potential to disrupt global supply chain dynamics. As countries become more protective, especially in the energy sector, prices tend to move higher. This tends to be bad for consumers but good for oil companies because they can sell their products at higher prices. It’s common for energy stocks to move higher during periods of geopolitical risk. I think that’s what we’re seeing here.
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