Visitors Now:
Total Visits:
Total Stories:
Profile image
By ETF Daily News (Reporter)
Contributor profile | More stories
Story Views

Now:
Last Hour:
Last 24 Hours:
Total:

Utilities Plunge As Interest Rates Surge On Trump Victory

Wednesday, November 9, 2016 8:49
% of readers think this story is Fact. Add your two cents.

(Before It's News)

The recent sell-off in utility-focused ETFs accelerated this morning, as Donald Trump’s shocking election win spiked interest rates and sent the fixed income markets into a tailspin.

Utilities, which offer sizable dividend payouts in exchange for relatively low growth prospects, have been a natural choice over the past several years amid record low interest rates. But now bonds are selling off hard and pushing interest rates to their highest levels in several months.

The natural fear is that higher rates will lead to lower prices for utility names, as investors no longer need to reach for yield.

Analyst David Fabian pointed out Utilities’ ongoing sell-off last month, noting a “poor risk-to-reward setup in interest rate sensitive asset classes.” That trend is clearly taking hold now in a big way, with REIT funds also selling off considerably this morning.

Utilities, along with other high-yielding sectors, could see considerably more downside through the end of the year if rates continue to grow higher, so this situation is worth monitoring closely for investors with exposure to the sector.

The Utilities SPDR ETF (NYSE:XLU) fell $1.68 (-3.42%) to $47.49 per share in Wednesday morning trading. Year-to-date, the largest fund tied to utility stocks has still gained 9.7%, but is now down more than 10% from its yearly highs.

XLU-2016-11-09

You are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)

Report abuse

Comments

Your Comments
Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

Top Stories
Recent Stories

Register

Newsletter

Email this story
Email this story

If you really want to ban this commenter, please write down the reason:

If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.