The stock market is waiting in anticipation of the upcoming inflation report this week. Economists expect May’s CPI measure to be on par with the 8.3% near 40-year-high inflation in April and expect a month-over-month increase of 0.7%. Also, last month’s job report reflected robust job growth, which indicates the economy is in fairly good shape, which will likely boost the Fed’s commitment to more interest rate increases.
Historically, amid such an inflationary environment, the energy sector tends to perform well. The sector, including oil and gas companies, outperformed inflation 71% of the time and has delivered a 9% annual real return because energy prices are a key constituent of inflation, and hence sector revenues are boosted.
