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Utilities: Leaders and Laggards Last Week

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Utility stocks traded higher

The utilities sector continued to increase and beat broader markets last week. The Utilities Select Sector SPDR ETF (XLU), which represents the top utility stocks in the country, rose 1.3%. The S&P 500 managed to gain 0.6% for the week ending June 14. Utility stocks have been rising for a long time. So far, utility stocks have risen ~17% in 2019. Broader markets have risen more than 15% during the same period.

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The benchmark ten-year Treasury yield kept trading lower and closed at 2.1% last week. Utility stocks and Treasury yields usually trade inversely to each other. The ten-year Treasury yield has fallen more than 20% YTD (year-to-date).

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Gains and losses

Many of the top utility stocks are trading close to their 52-week highs. NextEra Energy (NEE) stock rose 1.3%, while Southern Company (SO) stock rose 1.7% last week.

According to Reuters, NextEra Energy, Consolidated Edison (ED), and Calpine are trying to reverse a court ruling. The ruling said that a federal regulator doesn’t have a say in whether PG&E (PCG) decides to reject its power purchase contracts while in bankruptcy. PG&E stock fell almost 10% last week. PG&E filed for Chapter 11 bankruptcy protection on January 29. The utility faces ~$30 billion in potential liabilities associated with wildfires in 2017 and 2018. PG&E stock has rallied more than 50% since filing for bankruptcy.

AES (AES) stock rose ~2.5% last week. The stock has been on a solid uptrend. AES has gained more than 20% YTD. NRG Energy (NRG) was weak after its first-quarter earnings early last month.

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