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US Utilities: Weekly Review, Recent Performance, Charts, and More

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US Utilities: Weekly Review, Recent Performance, Charts, and More PART 1 OF 5

Utilities Continue Upward March near All-Time High

US utility stocks move higher

US utility stocks continued to trade strong and rose 0.5% last week, which ended November 10, 2017. In comparison, the broader markets fell marginally. The Utilities Select Sector SPDR ETF (XLU), a proxy of the S&P 500 Utilities Index, has risen ~15% year-to-date, largely tracking the SPDR S&P 500 (SPX-INDEX) (SPY).

US ten-year Treasury yields rose from 2.3% to 2.4% last week. Treasury yields and utility stocks generally trade inversely to each other. Higher interest rates make utilities less appealing in terms of dividend yields. Investors usually prefer Treasuries when interest rates are high.

Utilities Continue Upward March near All-Time High

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Recent performance

SCANA Corporation (SCG), one of the most beaten-down stocks in the S&P 500 Utilities recently, was the top gainer last week, rising 5.4%. The discounted valuation might have encouraged new entrants into SCG stock.

Among the utility giants, Southern Company (SO) was the top loser during the week, falling more than 2%. Renewables leader NextEra Energy (NEE) rose 1.7%, while the largest regulated utility, Duke Energy (DUK), rose 0.5%.

It’s worth noting that many large-cap US utilities (IDU) reported better-than-expected quarterly earnings in 3Q17. That could keep the utility sector robust in the near future.

Let’s look at some competitive utility stocks. Exelon (EXC) rose nearly 1%, and FirstEnergy (FE) rose a notable 3.5% last week. The largest merchant power stock NRG Energy (NRG) rose 2.6% during the week.

Capgemini’s World Energy Markets Observatory report

Capgemini recently published the World Energy Markets Observatory report on trends and the outlook for the energy sector. According to the report, North American utilities are actively investing in renewables and digital technologies despite regulatory and political uncertainty.

Despite the political uncertainties, utilities have increased investments in green and renewable energy. Within the power and utilities sector, efficiency program spending has almost tripled since 2007, from $2.2 billion to $6.3 billion in 2015.

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