Utility Stocks Crushed as Bond Yields Continue to Surge

Tumbling utility stocks weighed on the S&P 500 on Monday as investors dumped dividend-paying shares in favor of less-risky and higher-yielding U.S. Treasurys. 

The yield on 10-year Treasury notes extended its significant climb on Monday, reaching levels exceeding 4.7% intraday, marking the first instance since October 2007. By the close of the trading session, the benchmark yield settled at 4.682%, showing a notable increase from the previous Friday's rate of 4.572%. 

The current yield levels have surpassed the combined 3.94% dividend yield provided by utility stocks within the S&P 500.

Shares in the S&P 500’s utilities segment dropped 4.7%, marking their worst session since the early days of 2020’s Covid-19 lockdown. AES Corp. (AES:US), PG&E (PCG:US), and Dominion Energy (D:US) were among the 17 utilities in the index that fell more than 4%. 

Representative Daniel Goldman reported a $50,000 - $100,000 worth of sale of Dominion shares that took place in July. 

NextEra Energy (NEE:US) dropped nearly 9%. Shares in this energy stock are now down about 25% in the last few weeks. Congressman Jonathan Jackson was selling this falling stock back in July. 

Utilities, traditionally regarded as one of the more stable investments in the stock market and known for their substantial dividend yields, have experienced a notable decline of 20% in value throughout the current year.

“You have to compare their yield to what you can get from a risk-free asset in government bonds,” said Gregg Abella, chief executive of New Jersey money manager Investment Partners Asset Management. “As that gets repriced, it’s hard to know where the bottom is.”