Call it an S&P bright spot.
The Energy Select Sector SPDR Fund (XLE) was down less than 1 percent Monday even though oil prices fell sharply amid worries about a bankruptcy filing on Sunday by rig operator Diamond Offshore Drilling and uncertainty about whether production cuts would be enough to stem rapidly increasing supply.
While low oil prices will likely weigh on energy stocks as stay-at-home orders keep a lid on demand, the group could be turning higher on a different catalyst, Steve Chiavarone, a portfolio manager, equity strategist and vice president at Federated Hermes, told CNBC's "Trading Nation" on Friday.
"I think what the stocks are trading on ... is the virus data because the way this is ultimately going to get solved is, yes, production cuts, but [also] getting people back to work, getting the economy running and increasing the demand for oil," Chiavarone said.
Restarting the economy is "a function of the virus data and how well that's under control," so, it could be a major driving force for energy stocks as some U.S. states move forward with plans to reopen businesses.
"I think virus data that shows that maybe we're past the peak," Chiavarone said. "We're able to look through, see that reopening of the economy, see that increase in demand, and that's what's being anticipated in the share prices."
Craig Johnson, senior technical research analyst at Piper Sandler, agreed that energy investors could be betting that the worst is behind them.
"I've never seen such negative headlines and yet we continue to see the XLE trade higher," Johnson said in the same "Trading Nation" interview, pointing to a chart of the ETF.
"From my perspective, you've got major resistance right around $35," he said. "It closed back above that $35. You're going to have your next resistance coming in around the 40s."
The XLE was trading at $34.30 in Monday's premarket, down 0.9%.
"While everybody dislikes the energy names, ... I have to remind people it is the best-performing sector coming off of those March 23rd lows," Johnson said.
And with Chevron and ExxonMobil, the two largest holdings in the XLE, reporting earnings at the end of this week, "that's going to be a key tell to say how much of the negativity has already been priced into this sector," he said.
"To me, it looks like a lot already has," Johnson said.
U.S. oil prices slid 21% Monday to below $13.344 a barrel.