Infrastructure

Utilities Finally Defensive Again as Coronavirus Decoupled Them From Reality

Defensive stocks are supposed to hold up well in rocky markets. When the markets get so bad that everything becomes a source of funds for needed cash and liquidity, even the most defensive stocks can lose their luster. That was exactly what happened to the utility sector in America during this last month of panic selling around the growing COVID-19 pandemic fears.

It turns out that not all bad things last forever. It’s hard to know if a one day serious recovery means that common sense is starting to prevail again, but the rally in the major utility stocks was more than impressive and was last seen being even more impressive than the 3% gain in the Dow and 4% gain in the S&P 500. Needless to say, times are not normal when utilities get hit as hard as they had been hit, and then in a big recovery rally that they are also the leadership group.

Here is how they utilities have done so far on Tuesday, March 17, 2020.

The Utilities Select Sector SPDR Fund (NYSEArca: XLU) was last seen up up 10.7% at $56.60 on Tuesday, but the prior $51.12 close was down just over 28% from a recent all-time high of $71.10. There are many others that have been rallying as well.

American Electric Power Company, Inc. (NYSE: AEP) was last seen trading up 14% at $93.10 on Tuesday, but the prior $81.66 closing price was down 22.2% from its recent all-time high of $93.30.

American Water Works Company, Inc. (NYSE: AWK) was last seen trading up 13.5% at $134.84 on Tuesday after closing at $118.81 on Monday. That prior close was down 16.1% from its all-time high of $141.70.

Consolidated Edison, Inc. (NYSE: ED) was last seen trading up 14.9% at $91.43, and the prior $79.55 close was a drop of 16,3% from its all-time high of $95.10.

Duke Energy Corporation (NYSE: DUK) was last seen up 9.4% at $83.78 on Tuesday, but the prior $76.56 closing price was down 26.2% from its recent high of $103.79.

Essential Utilities, Inc. (NYSE: WTRG) was up 13% at $37.84 on Tuesday, and its $33.47 prior close was down 38.6% from its high of $54.52.

NextEra Energy, Inc. (NYSE: NEE) was last seen up 9.7% at $221.07, but the prior close of $201.37 was down 28.9% from its recent all-time high of $283.35.

PG&E Corporation (NYSE: PCG) was last seen trading up 5% at $9.40 on Tuesday, but we have only resorted to covering PG&E on news events now that its future and past have decoupled the California utility from the rest of the nation’s utility stocks.