Utilities rose 1.2% as the 30-year yield touched its highest since 2002
Utilities gained 1.2% on Tuesday, September 29, as the 30-year Treasury yield touched 5.62%, its highest since 2002, while energy fell 0.9%.
Key takeaways
Utilities rose 1.2% on Tuesday in XLU, the fund that holds the big US power and gas companies. It was the strongest gain among the eleven sectors, on a day when the 30-year Treasury yield touched 5.62%, its highest level since 2002.
The fund that holds the S&P 500, SPY, fell 0.2%.
Utilities rose 1.2%; energy fell the most
The 30-year yield closed at 5.59%, up from 5.56% on Monday. A higher yield on a long government bond usually weighs on utilities, because the bond offers a safer payout. Real estate, the other group tied to borrowing costs, slipped 0.1% in VNQ, the fund of US property companies.
NextEra Energy, the largest holding in XLU at 12.8%, rose 0.5%, while Constellation Energy rose 1.6% and Vistra 2.0%.
Energy fell the most
Crude oil was at $88.89 in late trading, down 4.0% from the prior settle, as Saudi Arabia resumed loadings at Yanbu, its Red Sea port, through the East-West pipeline.
Energy fell with crude, but by less. XLE, which holds the big US oil and gas companies, lost 0.9%, the largest decline among the eleven sectors. Exxon Mobil, nearly a quarter of the fund, slipped 0.7%, and Chevron, 18% of it, fell 1.0%. The oilfield services firm SLB fell 3.1%.
XLE is still up 40% this year, counting dividends.
Materials fell 0.8% in XLB, the fund of chemical, mining and steel companies. Steel Dynamics dropped 3.7% and Nucor 3.4%, the two that pulled it down most.
Carnival and Meta
Carnival jumped 13% after reporting its best-ever revenue and net income. Earnings, adjusted for some items, were $1.43 a share, in line with a year earlier even after a $0.10 hit from fuel and currency. The company lifted its full-year adjusted earnings forecast to about $2.24 a share.
Royal Caribbean rose 7.5% the same day. Tesla fell 1.3% and is nearly 18% of XLY, the consumer discretionary fund, which still closed up 0.1%.
Meta rose 3.3% and is more than a fifth of XLC, the communication-services fund. That move added about 0.7 percentage points, more than the fund's 0.3% gain. AT&T, Verizon and T-Mobile all fell.
The longer decline
XLU is down 6.4% over the past month and 11.8% over three months.
XLU bounced Tuesday after a two-week slide
On Tuesday it touched a 52-week low and still finished higher, a bounce inside that decline on a day when the long bond reached its highest level since 2002.
Frequently asked
Why is it unusual for utilities to rise when the 30-year yield climbs?
A higher yield on a long government bond usually weighs on utilities because the bond offers a safer payout.
How high did the 30-year Treasury yield go?
It touched 5.62%, its highest level since 2002, and closed at 5.59%, up from 5.56% on Monday.
Why did energy fall the most?
Crude oil fell 4.0% to $88.89 after Saudi Arabia resumed loadings at its Red Sea port of Yanbu, and XLE lost 0.9% along with it.
Is Tuesday's gain the end of the slide in utilities?
The article calls it a bounce inside a longer decline: XLU hit a 52-week low that day and is still down 6.4% over the past month and 11.8% over three months.
