Buy Or Sell Energy Stocks After Their Worst Election Week?
Start here: will the midterms move your stocks?
Here’s a tempting idea for the week after an election: buy whatever got hit hardest, because the crowd overreacted. There’s some real data behind it, and we’ll show you all of it, the wins and the losses. But the question that will serve you better is a quieter one: if energy or chips fell hard in your portfolio last week, does your plan already say what to do? We’ll come back to that at the end, after the numbers.
“The headline sells the stock. Your plan decides whether you should.” – Anonymous
What Does Everyone Already Know?
That this was an odd election week. The S&P 500 rose 1.6% the day after the vote, then was down 2.5% by Friday’s close. Of the 11 elections since 2006, only 2006 had also gone up on day one and been down by day three, and then by just 0.1%. The election didn’t do that. On Thursday the S&P 500 fell 4.4% as the AI trade unwound, led by the chip makers and the companies building power and data centers for AI. The why: a growing backlash against data centers and open talk of bans and moratoriums, including a pledge from Texas’s governor-elect.
The week’s biggest losers were the chip fund SMH, down 10.5%, the oil and gas producers fund XOP, down 9.3%, and the energy fund XLE, down 7.6%. For both energy funds it was the worst election week in our 20-year record. The winners: airlines (JETS), gold (GLD, its best election week on record) and communication services (XLC).
Did The Biggest Losers Really Bounce Back?
Here is every election’s single worst fund over the three days, and what it did over the next twelve months, measured from the third day’s close:
| Election | Biggest loser, week | Next 12 months | S&P 500, next 12 months |
|---|---|---|---|
| 2006 | Health care (XLV) −3.7% | +11.3% | +7.3% |
| 2008 | Clean energy (ICLN) −18.3% | −3.0% | +17.4% |
| 2010 | Long Treasuries (TLT) −3.0% | +23.8% | +2.2% |
| 2012 | Oil and gas (XOP) −5.6% | +34.0% | +28.4% |
| 2014 | Health providers (IHF) −2.4% | +13.8% | +2.3% |
| 2016 | Clean energy (ICLN) −8.1% | +18.2% | +19.4% |
| 2018 | Biotech (XBI) −3.0% | +4.0% | +11.2% |
| 2020 | Regional banks (KRE) −4.9% | +84.8% | +34.0% |
| 2022 | Health providers (IHF) −1.9% | −5.7% | +12.6% |
| 2024 | Clean energy (ICLN) −8.3% | +45.6% | +14.3% |
Six beat the S&P 500. The election week’s single best fund did it only 4 times in 10.
The wins were real, and some were big. After the 2020 election, regional banks and oil producers were among the week’s losers; over the next year the regional bank fund rose 85% and XOP rose 179%, while the S&P 500 rose 34%. After 2016, utilities (XLU) fell 6.4% in the week and then rose 26%, beating the market. Clean energy fell 8% after both 2016 and 2024; it then rose 18%, about level with the S&P 500, and 46%, more than three times its gain.
The losses were real too. In 2008 clean energy fell 18% in three days and was still down a year later, while the S&P 500 rose 17%. The bank fund KBE fell 13% that week and roughly another half over the next three months. A big fall can be the start of a bigger one.
Does The Edge Survive A Wider Look?
This is where we try to talk ourselves out of it. One fund per election is just 10 data points. So we counted the three worst and the five worst of each election week too, among the 22 sector and theme funds we checked, and set them beside the best:
| Each election’s… | Losers that beat the S&P 500 | Winners that beat it |
|---|---|---|
| Single biggest | 6 of 10 | 4 of 10 |
| 3 biggest | 16 of 30 | 12 of 30 |
| 5 biggest | 28 of 50 | 22 of 50 |
With the longer lists, the losers’ edge shrinks toward a coin flip. The winners lagged a bit more often than not.
Across all those funds and elections, a fund’s election week against the S&P 500 pointed the same way as its next year less than half the time. The honest lesson: election week didn’t sort winners from losers. If anything, it nudged prices a little too far, a little too fast.
So What About This Year’s Losers?
Start with energy, since it had its worst week on record. The big oil companies went into the election as the market’s quiet winners of the past year, and they gave a slice of it back:
| Stock | Election week | Past 12 months | Below 52-wk high |
|---|---|---|---|
| Exxon Mobil $165 | −6.5% | +45% | −12% |
| Chevron $211 | −5.6% | +41% | −11% |
| ConocoPhillips $134 | −5.6% | +60% | −13% |
| Marathon Petroleum $390 | −12.8% | +105% | −20% |
A bad week inside a very good year. Exxon, Chevron and ConocoPhillips were at their 52-week closing highs on Oct 30.
They aren’t priced for perfection. Price-to-earnings ratios run from about 7 for Marathon to about 17 for Exxon, and Chevron pays a 3.4% dividend. Revenue grew 13% to 31% over the past year. And what did energy do after its earlier losing election weeks? It’s a split decision:
| Election | Energy (XLE), week | Next 12 months | S&P 500, next 12 months |
|---|---|---|---|
| 2008 | −6.0% | +19.0% | +17.4% |
| 2012 | −4.4% | +27.1% | +28.4% |
| 2018 | −0.7% | −9.2% | +11.2% |
| 2020 | −2.0% | +112.8% | +34.0% |
Two beat the market, two didn’t. Nothing to bet the house on either way.
Then chips. SMH’s 10.5% drop is about level with 2008’s as the worst chip election week in 20 years, and SMH rose over the following year after all 10 earlier elections. But this year’s chip selloff was the AI trade, not the vote: worries about power and data-center opposition. Buyers tend to stay away until they have a clear reason to come back. Here’s the one we’d watch: an outright stop on data centers would hand the AI lead to China, and that isn’t happening. The spending is close to unstoppable. As we showed on Nov 5, Big Tech spent $1.15 for every $1 of cash it brought in last quarter, and even Nike has cut jobs while it keeps paying for AI.
And This Year’s Winners?
If losers deserve a second look, so do winners, since the single best fund of election week lagged the market 6 times in 10. Here’s how this year’s winners did after their previous best election weeks, all of which came in 2022:
| Winner | 2026 week | Best earlier week (2022) | 12 months after it |
|---|---|---|---|
| Gold (GLD) | +3.7% | +3.2% | +10.7% |
| Newmont | +12.5% | +6.4% | −19.2% |
| Airlines (JETS) | +4.0% | +4.9% | −12.1% |
| Communication (XLC) | +3.3% | +7.4% | +40.1% |
The S&P 500 rose 12.6% over the same 12 months. One of the four beat it.
Newmont is the one to look at carefully. It’s up about 50% in a year and more than tripled in three, trades at about 14 times earnings, and its operating margin over the past year was more than double its five-year average. That’s a business riding a high gold price. It’s also a stock already near the top of its range, about 7% below its high.
What’s The Inflation Connection?
Put energy and gold side by side and the week tells two stories at once. Energy falling while airlines rise is what you’d expect with oil getting cheaper (the oil fund USO fell 6% in the week), which would cool inflation. Gold having its best election week on record is what you’d expect if investors wanted protection, from inflation or from a shaky market. Long Treasuries edged up 1%, so long rates eased a little. Markets are hedging both ways. The Labor Department’s October consumer price report is due today, Tuesday, Nov 10.
Why would anyone want that protection? Our October case was that inflation is back, driven by three words, war, immigration and taxes, with AI spending as a fourth fuel on the fire: Inflation Is Back. Is A Stock Market Crash Next? None of those four went away on election night. That’s why gold drew buyers, and it’s what would bring buyers back to energy: if oil’s dip proves short and inflation stays sticky, energy’s bad week looks like a pause in a strong year. If inflation really cools, gold’s best week is the one more likely to fade.
That’s the useful part for a long-run investor. Energy and gold are your inflation insurance. Selling the insurance because it had a bad week, or doubling it because it had a good one, is how a plan gets turned upside down by three trading days.
What’s The Bigger Number?
Over the 10 earlier elections, the S&P 500 rose in the 12 months after day three every single time, by 2% to 34%. The losers’ list kept changing: clean energy, health care, banks, Treasuries, biotech. What didn’t change is that the market as a whole went up over the year that followed. The part that will still matter in 2027 is how much of each sector you hold and why, not which one had the worst Thursday.
What Goes On Your Plan This Week?
1. Check your energy and gold weights against your plan. Energy’s fall and gold’s rise both moved your mix a little. If either is now outside the band you set, rebalance back. If you never set one, set it now.
2. Don’t sell a loser because it lost. Sell it if the reason you own it changed. Exxon is still the business it was two weeks ago.
3. Don’t buy a loser just because it lost. The 2008 clean-energy case shows the risk. If you want more energy or chips, add in pieces, on a schedule, with a size you’d be fine holding through another 20% fall.
4. Write down when you’ll look again. Three months, not three days. Our one-page plan for the whole portfolio is in Will Stocks Rebound Today, Or Do You Have A Plan?
What this replaces: dumping last week’s losers, or loading up on them because “losers bounce.” The risk: if oil keeps falling, energy stocks can keep falling with it, and a plan won’t stop that. It keeps you from making a five-year decision on a three-day chart.
Losers bounced a bit more often than winners, but not reliably. The single worst fund of election week beat the S&P 500 over the next year 6 times in 10; widen to the five worst and it’s 28 in 50, not far from a coin flip. This year’s losers, energy and chips, fell for reasons that started outside the election: the AI trade, and energy giving back part of a very strong year. Treat energy and gold as the inflation insurance in your plan, rebalance by your band, and look again in three months.
What Should You Ask Next?
- Bank stocks jumped after three past elections. What happened next? Should You Buy Bank Stocks After The Election?
- Which other stocks overreacted to the vote? Which Stocks Overreacted To The Midterms?
- Is Exxon still worth owning for the cash it makes after a bad week? Should You Buy Exxon Mobil Stock For Its Cash?
Follow this story with us: we’ll score this year’s losers and winners against the record in three months and again in a year.
Does Your Plan Say What To Do With Last Week’s Losers?
One week rarely decides a year. If you have $1 million or more invested, see whether your plan fits what comes next in a free 15-minute call with a Trefis partner firm.
For questions about this article or underlying research, email help@trefis.com.