EVRG - Utility stocks sizzle as lackluster U.S. economic data sparks recession worry

2023-04-05 14:35:52 ET

The utilities sector easily takes the top spot on Wednesday's S&P leaderboard, +2.4% , with the group's countercyclical nature attracting investor support as the market weighs weaker than expected services sector data suggesting the U.S. may be heading for a recession.

Also, the second estimate of March's S&P U.S. Purchasing Managers Index increased less than expected .

Strength in U.S. Treasuries are narrowing the gap between the 10-year yield, ~3.29%, and the 3.04% average dividend yield of the SPDR Utilities ETF ( NYSEARCA: XLU ), giving utility names a boost and lifting the sector to its best reading in two months.

The day's utilities leaders on the S&P: American Electric Power ( AEP ) +3.7% , Xcel Energy ( XEL ) +3.6% , Evergy ( EVRG ) +3.3% , WEC Energy ( WEC ) +3.3% , Atmos Energy ( ATO ) +3.2% , DTE Energy ( DTE ) +3.1% .

Among other sector names rallying: Alliant Energy ( LNT ) +3% , Eversource Energy ( ES ) +2.9% , Ameren ( AEE ) +2.7% , Duke Energy ( DUK ) +2.7% , Exelon ( EXC ) +2.3% , Southern ( SO ) +2.3% .

Utility stocks have sold off since August, as rising interest rates have given investors alternatives for income, and many stocks in the sector are trading at double-digit discounts to historical valuations, Eric Landis writes in an analysis posted recently on Seeking Alpha .

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