Shares of power producers rose, but not by as much as the broad market, as diminished trade-dispute fears spurred a rotation into cyclical sectors.
Investors are attracted to the utility sector because dividend yields compare favorably to the derivatives markets and stock values suggest that investors are overly pessimistic about the outlook for dividend-per-share growth in the coming year, according to one brokerage.
"We forecast S&P 500 earnings-per-share growth will accelerate to 6% during 2020 from just 3% this year alongside a modest rebound in US and global economic growth and an abatement of idiosyncratic headwinds," said strategists at brokerage Goldman Sachs, in a note to clients. "We find it unlikely that the pace of dividend-per-share growth will slow so dramatically as the pace of earnings growth accelerates."
Standardized reporting of climate risks under the UN Principles for Responsible Investment could affect utility stocks and bonds, said strategists at brokerage Bank of America Merrill Lynch Global Research, in a note to clients.
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