There’s an old saying on the Street that stocks take the stairs up and the elevator down. In other words, gains typically occur over a period of weeks or months, but can be erased in days or even hours. The recent performance of the Utilities is a prime example. For months, investors have been amazed at how even in an up market one of the best performing sectors had been the Utilities sector.
Take a look at the chart below, which is from our weekly Sector Snapshots report, though. In the span of two weeks, the sector’s fortunes have turned on a dime, and as of this afternoon, the sector has nearly given up all of its outperformance versus the S&P 500. The fact that the peak of the sector’s relative strength coincided with the trough in Treasury yields just illustrates how sensitive to interest rates the sector is.