Its not a surprise that investors are fond of utilities. As a source of income, they do well when Treasury yields are falling, and that’s been the story for yields in 2019, the recent rise notwithstanding. Investors also like utilities for the fact that they have slow, predictable earnings, a great thing to have if you expect a recession in the future. And many people do.
Nothing says more about investor demand for utilities than the fact that they held up even as investors bet on value stocks. “With the Fed cutting rates again this week and the 10-year yield at 1.78% [now 1.71%], utilities continue to perform well, despite NT headwinds as broader momentum trades reversed slightly,” writes Goldman Sachs’ Neil Mehta.
But even though utilities are the only sector hitting a new high, others are darn close. Consumer staples for instance. Tech and consumer discretionary, too. And those sectors, along with industrials have actually gained more than utilities in 2019. The Dow Jones Industrial Average, however, has performed far worse.