Utilities outperform

With the steep fall on March 22, the S&P 500 lost more than 0.7% on a weekly basis, while utilities continued to gain. The Utilities Select Sector SPDR ETF (XLU) rose 0.5% for the week ending March 22. Renewed tensions in the US-China trade war and the slowing global economy caused the steepest fall in the broader markets since January. So far this year, the S&P 500 has risen ~12%, while utilities at large have risen more than 10%.

Utilities: Top Gains and Losses Last Week

Treasury yields and utility stocks usually move opposite to each other. The ten-year Treasury yield trended sharply lower and closed at 2.44% last week—lower than the three-month Treasury yield. When the long-term debt yields less than the short-term debt, it’s called a “yield inversion,” which might point to a recession. Concerns about a recession could move investors to safe-haven investments like utilities.

Leader and laggards

NextEra Energy (NEE) stock rose 1.4%, while American Electric Power (AEP) rose 1.6% last week. Both of these top utility stocks hit their new respective 52-week highs on March 22.

Southern Company (SO) closed marginally up last week. Last week, US Secretary of Energy Rick Perry announced up to $3.7 billion in loan guarantees to continue constructing the Vogtle nuclear power plant. The plant is years behind the schedule. The cost has doubled the initial estimate.

Dominion Energy (D) and PPL (PPL) were among the top losses last week. They lost almost 2% each.

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