Business
Same energy: Energy stocks are reporting weaker earnings, but the stocks are still flying high

Same energy: Energy stocks are reporting weaker earnings, but the stocks are still flying high

David Crowther

Last week was the busiest for second-quarter earnings season, and corporate America didn’t have much good news. Indeed, companies in the S&P 500 are currently on track to report the worst operating quarter since 2020, with data cited by the Wall Street Journal revealing that earnings for the flagship S&P 500 Index are down 5.2% on this time last year.

‍Same energy

‍In 2022, energy was the bright spot in the market. Soaring oil prices may have hurt your wallet when you filled up your tank, but it was a boom time for oil companies like ExxonMobil and Chevron. This year, the going isn’t quite so easy for the sector. ExxonMobil, for example, reported net income for the second quarter of $7.9 billion, less than half of the remarkable $17.9 billion it reported in the same quarter last year. Chevron, a smaller rival, also reported a leaner quarter, with a 28% decline in revenue.

However, even if the earnings aren’t quite as ludicrous as they were last year, energy stocks as a whole have broadly held onto their gains — rising more than 60% since the start of 2022.

‍Taking stock

‍Beyond energy, the performance of America's stock market has been fairly underwhelming since Jan 2022. Industrials have been the second-best performer, with a modest 6% increase, and while the headlines have been dominated by AI — propelling Nvidia, Microsoft, Alphabet, Apple, Amazon, and Meta to add a total of $3.1 trillion in market cap this year — the tech sector as a whole hasn't gained since 2022. Meanwhile, the real estate sector has been the hardest hit, grappling with fears of rising mortgage payments and empty office spaces.

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$98B ⛽
Max Knoblauch

The IATA released its latest financial outlook for the airline industry over the weekend, forecasting a $98 billion jump in the sector’s collective fuel bill. The world’s largest trade group representing airlines expects the oil spike to halve profits by 49% from last year to $23 billion.

The group also expects profit margins to halve year over year, falling from 2025’s 4.2% to 2%. Still, revenue is expected to climb to $1.17 trillion from $1.07 trillion.

A surge in the cost of jet fuel has rocked US and global airlines this year, leading Delta Air Lines, United Airlines, American Airlines, Southwest Airlines, JetBlue, and others to raise fares and ancillary charges like bag fees. Low-cost carriers, which operate on smaller margins, have been squeezed the hardest, resulting in Spirit’s shutdown.

“It’s a tough year for all airlines, especially those whose balance sheets had not yet recovered from COVID. And, of course, for those operating in the Gulf,” said IATA Director General Willie Walsh, who added that demand is holding up and about half of passengers expect to spend more on travel this year. “That bodes well for a strong northern summer peak season. The big unknown is how long travelers and shippers can tolerate the higher costs of connectivity.”

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GM has reportedly rehired more than 100 former Cruise employees, 18 months after shuttering the robotaxi unit

GM has rehired more than 100 employees it let go early last year when it shuttered Cruise, its former robotaxi business, according to reporting by The Information.

The hiring spree, which also includes employees from Nvidia and Uber, is geared toward ramping up GM’s plans for personal-use self-driving vehicles and not robotaxis. The former had been the focus of Cruise, prior to GM shuttering it in 2024.

Reporting last fall revealed that GM was attempting to rehire some former Cruise employees, but the scope of that effort wasn’t clear. More than 1,000 employees were laid off when the automaker scrapped Cruise, which it invested $10 billion into.

Google’s Waymo, Cruise’s former chief rival, is now worth $126 billion after a $16 billion funding round earlier this year. The company says it’s serving 500,000 paid robotaxi rides per week in the US.

Exclusive: With Some 100 Rehired Cruise Employees, GM Pursues Eyes-Off Autonomous Cars

Exclusive: With Some 100 Rehired Cruise Employees, GM Pursues Eyes-Off Autonomous Cars

Reporting last fall revealed that GM was attempting to rehire some former Cruise employees, but the scope of that effort wasn’t clear. More than 1,000 employees were laid off when the automaker scrapped Cruise, which it invested $10 billion into.

Google’s Waymo, Cruise’s former chief rival, is now worth $126 billion after a $16 billion funding round earlier this year. The company says it’s serving 500,000 paid robotaxi rides per week in the US.

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