How Utility Stocks Could Fare in 2020 with No Rate Cuts

The Fed kept benchmark interest rates unchanged at its policy meeting on December 11. It also indicated it would hold the rates steady through the end of next year, suggesting a major driver of defensive stocks might not be there next year.

Top utility stock Southern Company (SO) has surged more than 40% this year, the most among utilities. The biggest utility stock by market cap, NextEra Energy (NEE), has soared by 35% year-to-date.

Investors generally prefer utility stocks due to their stable stock price movements and higher dividend yields. Lower interest rates have also played a vital role in driving these defensives.

The Fed lowered benchmark interest rates by 25 basis points in July, September, and October. Utility stocks, on average, surged almost 10% in this time. The ten-year Treasury yield fell almost 16% in the same period. The Utilities Select Sector SPDR ETF (XLU) hit an all-time high in September.

View more information: https://marketrealist.com/2019/12/utility-stocks-fare-2020-no-rate-cuts/

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See also  https://marketrealist.com/t/finpx/

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