On Thursday morning, bond yields rose, diminishing the relief felt after the Treasury Department's announcement to boost purchases of long-term government debt. This increase in long-term Treasury yields has unsettled the stock market, but it has also highlighted specific stocks that may benefit from this trend.
According to LSEG data analyzed by CNBC Pro, stocks within the S&P 1500 that exhibit a strong negative correlation to the iShares 20+ Year Treasury Bond ETF (TLT) are likely to perform well as yields rise. Notably, energy companies dominate this list, with ConocoPhillips showing the strongest inverse correlation at negative 0.65.
Other significant players include Permian Resources and ExxonMobil, both at negative 0.61, followed by Chord Energy and Chevron at negative 0.59. The trend continues with Devon Energy at negative 0.58 and Occidental Petroleum at negative 0.57.
This pattern across the energy sector coincides with ongoing uncertainties regarding supply constraints in the Strait of Hormuz, which could lead to higher oil prices. While rising oil prices may enhance earnings for these producers, they also raise inflation concerns, which can further pressure Treasury prices and elevate yields.
Additionally, other commodity-related companies like LyondellBasell and Dow also appeared on the list, with correlations of negative 0.51 and negative 0.49, respectively