Wolfe Research knows its excitement about utilities is unusual. “Utilities are the hottest sector in the market right now,” Rob Ginsberg, the company’s managing director, wrote in an email to clients on Thursday. “When was the last time someone said that? It’s been a while.” Despite the slide during Thursday’s trading session, the Utilities Select Sector SPDR (XLU) Fund is still up about 6% over the past month. The fund is up about 10% this quarter and more than 18% in 2024. XLU YTD mountain Utilities Select Sector SPDR Fund (XLU), year-to-date, investors have been pouring in in recent months, according to fund flow data compiled by Ginsberg. In fact, he said weekly net inflows have been positive in 14 of the past 16 weeks. Ginsburg said the industry is inherently strong and includes companies like PG&E and NextEra. According to Wolfe’s model, more than four out of every five stocks in the S&P 1500’s utilities sector are in an “uptrend.” However, Ginsburg named NRG Energy and Southwest Gas Holdings as among the few that investors should avoid. As market volatility increases, new excitement emerges in a traditionally boring industry. Earlier this month, the S&P 500 had its worst day of 2022, as a slew of economic data stoked fears that the U.S. was heading into recession. Since then, however, stocks have rebounded, with broad market indexes back to stunning levels last month’s record levels.
