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Utilities Shine on August 12: Are They a Good Investment?

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Utilities Shone on Wall Street on August 12

The SPDR S&P 500 ETF (SPY) is one of the most popular and active ETFs in the US. It tracks the S&P 500 Index. It’s traded on AMEX (American Stock Exchange). It has 502 constituent stocks. SPY returned 0.12% on August 12, 2015.

The top performers on August 12 were NRG Energy (NRG), CF Industries Holdings (CF), and Fidelity National Info (FIS) from the utility sector, basic material, and information technology sector, respectively. Their respective returns as of August 12, 2015, were 6.76%, 7.63%, and 8.73%. The companies at the bottom were Macy’s (M), Yahoo! (YHOO), and Coach (COH). They had returns of -5.06%, -4.27% and -4.44%, respectively.

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Is the utility sector a promising investment?

Out of SPY’s 502 component stocks, 265 stocks went up with an average one-day return of 1.16%. Recently, the utility, telecommunication, and information technology sectors performed extremely well. In the utility sector, on August 12, all 30 stocks went up. Out of those stocks, 25 stocks are trading above their respective 100-day, 50-day, and 20-day moving averages. This highlights the sector’s upward trend. These stocks generate passive income even in tough times like a recession. They’re a good buy for risk-averse investors.

The above graph shows the performance of the utility sector represented by the Utilities Select Sector SPDR ETF (XLU) and SPY since January 2015.

Let’s move on to analyze how the other sectors in SPY performed on August 12.

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