Even the biggest upward movements in the stock market can't last forever, and after three days of really big gains, Wall Street looked ready to take at least a short break Friday morning. Oil prices remained at elevated levels, the war in Ukraine continued, and the confluence of expirations of various futures and options contracts portended what could be an extremely volatile day for the markets. As of 7:30 a.m. ET, futures on the Dow Jones Industrial Average (^DJI 0.56%) were down 211 points to 34,250. S&P 500 (^GSPC -0.88%) futures had fallen 31 points to 4,379, while Nasdaq Composite (^IXIC -2.05%) futures had given back 105 points to 14,007.
Looking at the Dow Jones Industrials more closely, one fascinating element of what 2022 has brought for investors is just how much disparity there is in performance of individual stocks. Chevron (CVX 1.54%) has been the best performer in the Dow by far, while Nike (NKE -1.26%) has been among the many Dow stocks that have struggled with the overall index still down more than 5% for the year. Below, you'll learn more about what has helped send both stocks moving so sharply.
What's good for oil is good for Chevron
It shouldn't come as any huge surprise that shares of Chevron are up more than 34% so far in 2022. The integrated oil and gas giant has seen the best energy market environment since the mid-2010s, and investors have complete confidence that Chevron will cash in on the higher prices it will get for its products.
Image source: Getty Images.
Coming into 2022, investors were already excited about how much progress Chevron had seen. Oil prices had risen to $75 per barrel, up from close to $50 at the beginning of 2021 and ensuring that the energy giant's financial results would be a lot better. Indeed, revenue jumped 65% from 2020 to 2021, and Chevron more than made up for $5.5 billion in losses during the first year of the COVID-19 pandemic with net income of more than $15.6 billion last year.
Many shareholders have wondered how big energy companies like Chevron will deal with the transition away from fossil fuels to electrification and renewables. The $3.15 billion acquisition of Renewable Energy Group that Chevron announced in late February shows part of the strategy that the oil giant is using, seeking to take waste products and turn them into renewable fuels like biodiesel.
Meanwhile, Chevron understands that there are elements of this oil boom that could be temporary, and so it's looking to boost stock buybacks while getting its capital plans in order. Oil stocks could see moves lower if the Russia-Ukraine war ends favorably, but in the long run, Chevron looks like it's going in the right direction.
Nike runs backward
At the other end of the race is Nike, whose shares have dropped 25% so far this year. The athletic shoe and apparel leader has seen its growth slow somewhat, and the general concern over high valuations for certain stocks in the consumer discretionary sector has been a big factor in the decline in the share price.
Nike's fiscal second-quarter results from back in December show a lot of the headwinds that the company has faced. Revenue of $11.4 billion was up just 1% year over year, and earnings per share of $0.83 climbed just 6% from year-earlier levels. In particular, Nike has had to deal with significant supply chain disruptions as the pandemic has continued to have an impact on countries on which the shoemaker relies for inventory.
Those challenges show up in Nike's immediate financial numbers, but there's nothing transitory about the worldwide strength of its brand and demand for its products. Indeed, Nike has moved aggressively to make its products available directly to consumers by fleshing out its e-commerce distribution channel, complementing its network of Nike stores and increasingly cutting out third-party retailers.
Nike's valuation got up to extreme levels, and at around 35 times projected earnings for the 2022 fiscal year, some will argue that it's still expensive. Nevertheless, with all the long-term potential it has, Nike looks like a good candidate to bounce back in time.
