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Utility company stocks (NYSEARCA:XLU) mostly finished higher in Tuesday’s trading, recouping a slice of the previous session’s large losses prompted by continued selling in U.S. Treasurys that is driving yields to multiyear highs.
Bargain hunters moved in to scoop up stocks in the downtrodden sector, even as the yield on the 10-year Treasury note exceeded 4.8% for the first time since August 2007, ending Tuesday at 4.801%, while yields on the two-year note rose to 5.148% and the payout on 30-year bonds hit 4.936%.
Some of Monday’s biggest losers snapped back, including NiSource (NYSE:NI), whose +3.3% jump led the S&P 500 and was its biggest percentage gain since November.
Also showing up among Tuesday’s top 15 gainers on the S&P: (FE) +3.1%, (CMS) +2.5%, (CNP) +2.3%, (SO) +2.1%, (AEE) +2%, (DTE) +1.9%, (ED) +1.9%, (PPL) +1.9%, (EVRG) +1.8%, (SRE) +1.6%.
NextEra Energy (NYSE:NEE), which sank 9% on Monday, closed +1.2%, but NextEra Energy Partners (NEP), finished -6.4% after plunging 16.7% on Monday and shedding nearly half its value since its surprise growth guidance cut and the decision from its parent not to proceed with an asset dropdown.
Utility stocks are unusually oversold, Bespoke Investment said Tuesday, after the S&P’s utility sector closed Monday “3.2 standard deviations below its 50-day moving average, which is the most oversold reading for the sector since February 2021.”
The sector’s 11% decline is the steepest five-day decline since last June, according to Bespoke, “but the difference between these two periods is that back in June 2022, the S&P 500 was down over 10% during that same five-day span while it’s only down 1% in the current five-day span.”
According to Bespoke, “after adjusting for the S&P 500’s performance, the utility sector is underperforming the S&P 500 by the widest margin over a five-day period since October 2022.”
