Utility stocks take a beating amid rising rates

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Soaring bond yields have made the stocks less appealing. Plus, the market expects investments for new power plants, aging infrastructures and renewable technologies to cost more as interest rates stay higher for longer.

Utility stocks took a breather on Tuesday following the sector's worst daily performance since April 2020.) fell 4% on Monday and recovered to end the next day higher. Year-to-date the ETF is down a whopping 21%.Stocks for companies that range from electricity providers to water suppliers normally offer dividends. But those payouts don’t look as appealing to investors when compared to soaring bond yields in a tight monetary policy environment.

Stanislaus County, California, May 19, 2023: Jim Shandalov, Vice President at NextEra Energy Resources and California Governor Gavin Newsom , former Mayor Antonio Villaraigosa walk along the construction of the battery storage facility for a solar farm. also means the cost of capital will stay elevated, another reason why the sector sold off aggressively last quarter. The market expects investments for new power plants, aging infrastructures and renewable technologies will cost more.

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