Utilities beat broader markets

The broader market sell-off intensified last week. Most of the major indices recorded the worst week in a decade. Utilities continued to beat equities at large. The Utilities Select Sector SPDR ETF (XLU), the representative of the biggest utilities in the country, fell more than 5%, while the S&P 500 fell almost 8% for the week ending December 21.

Bond king Jeffery Gundlach’s comments about the markets making new lows tarnished the sentiment early last week, which was followed by a quarter-point rate hike by the Fed. Continued weakness in the energy sector and concerns about the US government shutdown dented the markets.

Utilities Beat Broader Markets Last Week

Last week, the quarter-point rate hike from the Fed was the fourth hike in 2018—the most hikes since rate normalization started in December 2015. The benchmark ten-year Treasury yield trended lower and closed at 2.79%. Treasury yields and utilities usually trade inversely to each other.

Sell-off all over

NextEra Energy (NEE) fell 4%, while Dominion Energy (D) stock fell 2.6% last week. American Electric Power (AEP) stock fell more than 4% during the week.

PG&E (PCG) was among the top losses last week. PG&E fell more than 12%. According to Reuters, the California Public Utilities Commission has ordered immediate action against PG&E for falsifying safety documents for its natural gas pipelines.

NRG Energy (NRG), one of the top gainers in 2018, also fell 12%. National Grid (NGG) fell 7%, while Consolidated Edison (ED) fell almost 5% last week.

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