Market Digest: FL, OGE, SRE

Summary

If one were to ask the average investor to name the leading S&P 500 sector this year, Information Technology might very well be the most-common answer, even after the recent tough few months. But that answer would be wrong, as the Utilities (XLU) sector is leading the pack so far in 2024, with an incredible 26% return as of this writing (which doesn't include dividends). Should the masses say that semiconductor stocks represent the leading industry, they would be correct. For 2024, XLU has soared 26%; Communication Services 20%; Financial 19%; Consumer Staples 18%; Healthcare, Industrials, Information Technology, and Real Estate about 15%; Materials 9%; Consumer Discretionary 8%; and Energy 4%. So there are very broad gains, unlike in recent years. One could try to make the case that the leadership leans defensive, but many stocks in Utilities have surged due to the coming increased power demand from the buildout in data centers and AI. Meanwhile, Healthcare, also considered defensive, has been boosted by weight-loss drugs, which reflects R&D as well as innovation. Strength in Utilities has been led by conventional electricity stocks the often have large capitalization, such as NEE (+44%), SO (+31%), CEG (+69%), AEP (+30%), and