The U.S. stock market has faced increased volatility in 2026, primarily driven by the ongoing Iran war, which has disrupted market stability after three years of strong returns. Despite this turbulence, defensive and value stocks have shown resilience, but the standout performer is the energy sector. The Vanguard Energy ETF (VDE) has surged approximately 30% year-to-date, significantly outpacing the Vanguard S&P 500 ETF, which has declined by 1%.

This impressive performance can be attributed to a combination of geopolitical tensions and robust demand, which have created a supply shock in crude oil markets. With ExxonMobil and Chevron comprising over 35% of VDE’s portfolio, the ETF not only offers solid returns but also presents an attractive P/E ratio of 20 and a yield of 2.3%. As the situation in the Middle East remains uncertain, energy stocks could continue to benefit from elevated prices and steady demand.

For market professionals, the Vanguard Energy ETF serves as a compelling investment option amid current volatility, but it’s crucial to stay vigilant regarding geopolitical developments that could impact sector performance.

Source: fool.com