Utilities Is The Best Performing Sector In The S&P 500 This Year
Despite Nvidia’s inexorable rise and the ongoing dominance of the Magnificent 7, it’s good old fashioned utility stocks — think electricity, water, and gas companies — that are leading the market this year, up more than 27%. That’s better than the Information Technology or Communication Services sectors.
So, why are utility stocks soaring?
We never know exactly why any stock is doing anything, but in this case the market seems to be seeking exposure to utilities for two reasons. Firstly, after years of tighter monetary policy, we’re close to getting a cut in interest rates, lowering the borrowing costs for utility companies, as well as making their high dividend yields relatively more attractive to income-seeking investors.
The second reason is more fundamental. Many utilities stocks are indirectly exposed to AI (and you thought this story was about something else), by powering the ever-growing demand for data centers.
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