Too early for new Wall St leader

By Walter Brandimarte

NEW YORK (Reuters) - The energy sector became the last of the big bull-market leaders to fall prey to the bears this week, a development that would usually signify that the remaining excesses have been flushed out and the worst is over for Wall Street.

But for stocks to start a sustainable recovery, another sector would have to step up and take the baton to lead the market higher.

While over recent weeks that role has been taken on by the financial sector, analysts say these beaten-down stocks are nowhere near ready to assume that responsibility, as it is still unclear how many more write-downs banks will face while the credit crisis unfolds.

It may also be too early to count out the energy sector. Energy's plunge into a bear market has been breakneck in the past few weeks and is linked primarily to a sharp drop in the price of oil, which analysts still see at relatively high levels in the foreseeable future.

"Energy has been pretty beaten down here over the last three weeks, but I wouldn't say it's time to pass the baton just yet," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in New York.

He said a move toward oil's 200-day moving average around $110 a barrel could result in a technical bounce in the price of the oil that would lift energy and natural gas stocks anew.

"To expect that it's all over for energy and energy stocks, I think, is premature. I think we've seen more of a swing in the trade than a move based on fundamentals. We're just getting a correction in a very broad advance in the price of oil," Pado said.

Nevertheless, the S&P's financial index .GSPF has staged an impressive comeback over the last month, gaining more than 28 percent since July 15 and outpacing the S&P 500 .SPX by more than 20 percent.  Continued...