Why ExxonMobil, Conoco Phillips, and Lockheed Martin Rallied on a Down Day for the Markets

Shares of oil and gas majors ExxonMobil (NYSE: XOM) and Conoco Phillips (NYSE: COP), as well as defense contractor Lockheed Martin (NYSE: LMT), rallied on Tuesday, up 2.8%, 4.2%, and 3.5%, respectively, as of 1:17 p.m. ET, even as the broader indices were down between 1% and 2% at that time.

Fortunately for their shareholders, but unfortunately for other sectors and the world, these critical companies saw their stocks rally as oil prices spiked on news that Iran was launching an imminent attack on Israel.

Shots fired in the Middle East

On Tuesday, a senior White House official said Iran is preparing to launch an imminent ballistic missile attack on Israel. Then at midday, the Israel Defense Forces reported Iran had in fact launched missiles toward Israel. The attack comes after Israel has struck against Iran’s proxy army Hezbollah operating in southern Lebanon. In addition, Israel is preparing a limited military operation in southern Lebanon to clear the area of Hezbollah militants.

Given that Iran and other Middle East neighbors are major oil and gas producers, the prospect of a wider regional conflict has the potential to disrupt oil supplies to the rest of the world. This is why both ExxonMobil and Conoco Phillips rallied along with oil prices, which were up nearly 4.5% to $71.25 as of this writing.

Higher oil prices would obviously benefit the top and bottom lines of Exxon and Conoco. Conoco is a pure explorer, but doesn’t have significant production in the Middle East region. And though Exxon is more diversified with midstream and downstream assets, it still makes the bulk of its earnings through oil and gas exploration, and therefore benefits when prices rise. Furthermore, Exxon derives most of its exploration from outside the Middle East.

And obviously, whenever geopolitical tensions ramp up, that usually bodes well for U.S. defense contractors’ stocks, with Lockheed Martin being the second-largest U.S. defense contractors by market cap.

Lockheed has actually had a tremendous year, with the stock surging over the summer on the back of better-than-expected earnings and more sales of its F-35 fighter jets to more allied countries.

In addition to general geopolitical news, Exxon and Lockheed also received two positive company-specific bits of news today. Exxon received approval from the Nigerian government to sell its Nigeria offshore assets to Seplat for $1.28 billion. Of note, Nigeria has been somewhat of a difficult geography for oil and gas operators recently, due to theft and corruption. Meanwhile, Lockheed Martin received a near-$3.9 billion naval contract for its Trident missile systems today, in addition to some smaller aeronautics contracts.

Neither news item is tremendously impactful to either company, given the overall size of these industry giants; however, these items were still likely incremental positives.

Oil and defense stocks: Hedges against geopolitics

While oil and gas stocks are out of fashion for many investors, given the focus on climate change and reducing emissions, they do offer a hedge against geopolitical events, such as the one we are seeing today. Remember, after Russia’s invasion of Ukraine in early 2022, traditional energy stocks went on to be some of the best performers that year.

So while oil and gas and defense stocks may not be as exciting as high-growth artificial intelligence (AI) plays these days, they do offer benefits in a healthily diversified portfolio. Moreover, most traditional energy and defense stocks also pay decent dividends.

So, today should be a reminder to investors of the role these types of stocks can play, offering hedges against geopolitical disasters, all while paying you growing dividends in the meantime.

Should you invest $1,000 in ExxonMobil right now?

Before you buy stock in ExxonMobil, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and ExxonMobil wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $744,197!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of September 30, 2024

Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.

Why ExxonMobil, Conoco Phillips, and Lockheed Martin Rallied on a Down Day for the Markets was originally published by The Motley Fool

Source link

Visited 1 times, 1 visit(s) today

Related Article

Down 97%, Should Investors Buy This High-Yield Dividend Stock in February?

Investors can have totally different objectives. The stock market is a massive arena where participants don’t have to play the same games. Some are just after a steady stream of income. If this sounds like you, maybe it’s time to look at this business that Berkshire Hathaway has a 37% stake in. It’s trading 97%

Here’s My Highest Conviction AI Stock to Buy Right Now (HINT: It Recently Partnered with Nvidia)

Brookfield Corporation is going all-in to capitalize on the once-in-a-generation AI infrastructure opportunity. AI has the potential to be the most impactful technology in history. It can significantly increase productivity and efficiency, solve complex problems quickly, and help drive medical breakthroughs. However, the technology can only realize its full potential if the world builds the

Bank of America Predicts Up to 240% Jump for These 2 ‘Strong Buy’ Stocks

The stock market has been treading water so far this year, with the S&P 500 up roughly 1% while the Nasdaq has slipped 1.5%. Tech stocks have struggled to regain last year’s momentum as investors reassess the durability of AI-driven spending, the margin impact of massive capital expenditures, and whether growth rates can justify the

Global cash is fueling a historic start for Latin America stocks

(Bloomberg) — Global investors are piling into Latin American stocks at the fastest clip in a decade, sending markets across the region to multi-year highs. Equity markets in Brazil, Colombia and Mexico have seen a surge in overseas buying, helping push the MSCI EM Latin America Index to an eleven-year high and jumping over 20%

Why a Legendary Wall Street Permabear Is Suddenly Sounding More Upbeat

It’s a rare day when John Hussman, the legendary permabear who called the 2000 and 2008 crashes, expresses a degree of optimism about stocks. One of those days came this week, however, when Hussman published his monthly market comment. The president of the Hussman Investment Trust has been consistently bearish throughout the 2010s and 2020s,

3 Brilliant Growth Stock ETFs to Buy Now and Hold for the Long Term

From 2023 to the end of 2025, portfolios that were heavily invested in growth stocks, especially megacap, tech, and artificial intelligence (AI)-focused growth stocks, probably outperformed the major indexes like the S&P 500 (SNPINDEX: ^GSPC). But 2026 is different. Will AI create the world’s first trillionaire? Our team just released a report on the one little-known

History Says Now Is the Time to Buy These 2 Brilliant Stocks

The market seldom provides great buying opportunities for some of the best companies on the planet. However, with the latest round of tech sell-offs, that’s exactly where we find ourselves. Two of the most dominant stocks in the market over the past few years are on sale at historically cheap levels, and if you swoop

February 26 Could Be a Huge Day for the Stock Market

Feb. 26 could be a huge day for the stock market. Depending on how large the news is, one company may steer the market one direction or another based on what it says. The company I’m talking about is none other than Nvidia (NVDA +0.94%), the world’s largest company by market cap by a wide

Novo Nordisk Stock Investors Just Got Great News From Eli Lilly

But it’s good news for Eli Lilly, too. Novo Nordisk (NVO 2.13%) has struggled over the past year, and the company recently hit another setback when it reported disappointing fourth-quarter results and even worse guidance for fiscal year 2026. The stock price fell by nearly 15% following these developments. However, there are several things to

0
Would love your thoughts, please comment.x
()
x