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Utilities’ Weekly Review: How the Defensives Played Out

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Utilities stay strong

In the week ending February 8, the utilities sector outperformed broader markets for the third consecutive week. The Utilities Select Sector SPDR ETF (XLU) rose more than 2%, while the S&P 500 rose marginally last week. The ten-year Treasury yield trended lower and closed at 2.65%. Utility stocks and Treasury yields usually trade inversely. So far this year, broader utilities have risen ~5%, while broader markets have risen 8%.

XLU % change

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Gains and losses

NextEra Energy (NEE) and Duke Energy (DUK) stock rose ~3% each last week. Duke Energy is scheduled to report its quarterly earnings this week.

Exelon (EXC) reported its earnings last week. The company earned $3.12 per share in 2018—an increase of 19% YoY. Exelon’s revenues increased 7% YoY. The stock rose 0.6% last week.

PG&E (PCG) stock continued its upward march last week. The stock rose ~9%. The stock has risen more than 18% since it filed for Chapter 11 bankruptcy on January 29. The stock witnessed an interim weakness when the utility’s gas pipeline exploded and set five buildings on fire in San Francisco last week.

AES (AES) and NRG Energy (NRG) stock rose 3.2% and 2.5%, respectively, last week. Both of the stocks have gained almost 70% each in the last 12 months.

Utility stocks are approaching their respective 52-week high levels. Previously, the levels were seen in December and the stocks fell ~10% soon after.

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