Utility stocks seem tepid
Last week, utility stocks continued to underperform broader markets for the third consecutive week. The Utilities Select Sector SPDR ETF (XLU) rose 0.2%, while the S&P 500 rose 0.5% for the week ending April 12. Easing recession tensions and a positive start to the earnings season boosted investors’ sentiment last week. The benchmark ten-year Treasury yield trended higher and closed at 2.56% during the week. Utility stocks and Treasury yields generally trade opposite to each other.
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Leaders and laggards
NextEra Energy (NEE), the biggest utility stock by market cap, rose 0.4%, while regulated utility giant Southern Company (SO) rose 1.7% last week. Southern Company stock has risen in the last few months and almost 20% YTD. The potential of reduced risks for Southern Company’s Vogtle plant after federal loan guarantees last month could have impacted the continued rally.
The top-rallied utility stock in 2019, AES (AES) fell 1.4%, while PPL (PPL) fell almost 1% last week. So far, AES has risen more than 25% in 2019. The company’s better earnings prospects in the last few months likely transformed investors’ sentiment.