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Berkshire, Energy Stocks Send Stock Markets Toward Record Heights

By Dan Caplinger - May 3, 2021 at 12:15PM

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Can the bull market keep charging forward? These stocks say yes.

The new week got off to a generally good start on Wall Street, as most major market benchmarks were higher. Investors continue to have confidence that efforts from the federal government and the Federal Reserve will be sufficient to keep the U.S. economy on a pathway to recovery. As of 11 a.m. EDT, the Dow Jones Industrial Average (^DJI -1.56%) was up 274 points to 34,149. The S&P 500 (^GSPC -2.01%) gained 17 points to 4,198, which is above its record closing level, while the Nasdaq Composite (^IXIC 0.00%) eased lower by 12 points to 13,951.

Over the weekend, Berkshire Hathaway (BRK.A -1.32%) (BRK.B -1.63%) held its annual shareholder meeting, and investors generally liked what they heard from Warren Buffett and his team of executives. Meanwhile, the energy industry helped lead the market higher as well, as rising crude oil prices once again supported the notion of a strong economic rebound in 2021 and beyond.

Berkshire drops some bombshells

Shares of Berkshire Hathaway were up 1% to 2% on Monday morning. The annual shareholder meeting still didn't bring thousands of people to the company's Omaha, Nebraska, headquarters due to the pandemic, but it did feature commentary from both Warren Buffett and Berkshire Vice Chair Charlie Munger, and there were some interesting comments from the insurance giant.

Berkshire's earnings were solid, but investors have to remember that a lot of the company's quarterly results hinge on the performance of its stock portfolio, which gets marked to market every three months. Because the stock market did well in the first quarter of 2021 and poorly in the year-ago period, Berkshire's net income soared, reversing year-earlier losses.

Yet the report and the meeting revealed some key facts:

  • Berkshire kept buying back its stock even as its share price rose during the first quarter, spending $6.6 billion on repurchases.
  • Munger was in rare form, panning Bitcoin, the Robinhood trading app, and even Buffett's recommendation of an S&P 500 index fund rather than Berkshire's own stock.
  • Without necessarily meaning to, Buffett and Munger made it clear that head of non-insurance operations Greg Abel will eventually replace Buffett in leading Berkshire. The pair reassured longtime shareholders that Berkshire's corporate culture will be safe in Abel's hands.

Investors hope that the shareholder meeting will return to a public forum in Omaha in 2022. For now, though, they're happy to see Berkshire Hathaway thriving at all-time highs.

Derrick and pipe with two workers on a platform

Image source: Getty Images.

Another energetic day

Looking more broadly at the stock market, energy stocks did well. In particular, oil services companies Baker Hughes (BKR 2.14%) and Halliburton (HAL 2.98%) were among the larger market leaders in the sector, as their share prices rose 8% and 5%, respectively.

Monday was a good day for commodities generally. Oil prices rose $1 to come within spitting distance of the $65-per-barrel mark once again. Mining stocks also fared well on the back of a $27-per-ounce gain in gold to $1,795 and a $1.20-per-ounce jump to push silver prices above $27.

Investors have been increasingly optimistic about the energy market's prospects. Last week, Wall Street giant Goldman Sachs predicted that crude oil prices could reach $80 per barrel by this summer, as a global economic reopening starts to work down plentiful inventories of crude and refined products. That would be especially good news for oil services stocks, which would likely see a huge jump in production activity from their oil and gas exploration and production customers.

Baker Hughes in particular might also benefit from the eventual completion of stock sales from former parent General Electric. GE's stake is down to around 25% now, and once that selling pressure is gone, Baker Hughes could find itself in position to take full advantage of a more favorable environment for the energy sector.

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Stocks Mentioned

Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.B
$273.86 (-1.63%) $-4.54
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$30,946.99 (-1.56%) $-491.27
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$3,821.55 (-2.01%) $-78.56
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.A
$412,170.01 (-1.32%) $-5,529.99
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
^IXIC
$11,524.55 (0.00%) $0.00
Halliburton Company Stock Quote
Halliburton Company
HAL
$33.19 (2.98%) $0.96
Baker Hughes, a GE company Stock Quote
Baker Hughes, a GE company
BKR
$30.07 (2.14%) $0.63

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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