Shares of power producers rose sharply as traders hedged their bets on the outlook for economic growth.
The SPDR Select Sector Utilities exchange-traded fund, which tracks the utilities industry group of the S&P 500, rose 0.9% but remains down 5.4% for the year to date -- the worst performance of the 11 industry groups. There could be both fundamental and technical reasons for this underperformance, said one strategist. From a fundamental perspective, interest-rate levels are major concern for the group, "with utilities being so debt laden, and also being an alternative to fixed income," said J.D. Joyce, president of Houston financial advisory Joyce Wealth Management.
The rise in yields has extended to savings accounts. "You can get 5% on a money market, maybe that's why there's not as much demand because you have a parking spot," said Joyce. From a technical perspective, "perhaps it's a bullish indicator, because typically, you'd want to own utilities when things are little rough in economy," said Joyce. "It's a defensive sector, so the fact that growth continues to rally and this sector is languishing, maybe that's bullish."
Two former executives at FirstEnergy, including former CEO Charles Jones, and the ex-chairman of the Public Utilities Commission of Ohio, Samuel Randazzo, have been indicted on public corruption charges related to a nuclear bribery scandal in the state.
Write to Rob Curran at rob.curran@dowjones.com
(END) Dow Jones Newswires
02-12-24 1842ET
