Utilities extend sharp losses as more Fed rate hikes expected
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Utilities are falling sharply Thursday for a second straight session along with rate-sensitive equities as Federal Reserve officials continue to signal interest rates will keep rising, sending U.S. Treasury yields spiking.
The Utilities Select Sector ETF (NYSEARCA:XLU) -2.4%, again the worst performer among the 11 S&P industry groups.
Five of the day's 15 worst performers on the S&P 500 are in the utilities sector: (NYSE:CNP) -4.5%, (NYSE:SO) -4%, (WEC) -3.9%, (DTE) -3.7%, (D) -3.7%.
Other noteworthy decliners include (AEP) -3.6%, (NI) -3.4%, (XEL) -3.3%, (DUK) -3%, (LNT) -2.9%, (PNW) -2.9%, (PEG) -2.6%, (ED) -2.5%, (EIX) -2.5%.
Janney analyst Michael Gaugler said while 2022 likely will end as a disappointing year for utility sector performances, the group is "likely to rally once the U.S. Federal Reserve signals its rate hike policy is coming to a close," according to Bloomberg.
Utilities (XLU) should recover because of "two demand related catalysts: global warming and greater EV adoption, as well as the Biden administration's ability to pass clean energy and infrastructure legislation," Michael Fitzsimmons writes in an analysis posted on Seeking Alpha.