Southern Co., the second-largest U.S. power company by market value, fell to its lowest price in five months as investors lost enthusiasm for utilities.
The utility owner fell 1.9 percent to $45.05 at the close in New York.
Investors who flocked to regulated utilities such as Atlanta-based Southern, for their high dividend payout ratios may now be moving to riskier stocks after the Federal Reserve announced plans to buy mortgage securities, Paul Patterson, a New York-based utilities analyst with Glenrock Associates, said in a telephone interview.
“You could have some weakness in defensive names like utilities as investors look for riskier investment options,” Travis Miller, Chicago-based director of utilities research for Morningstar Inc., said in a telephone interview.
The Standard & Poor’s 500 Utility Index fell 0.8 percent amid a worldwide stock rally sparked by news the Fed will expand holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month.
Investors have soured on utilities in recent weeks as consumers curb their electricity consumption, Angie Storozynski, a New York-based utilities analyst with Macquarie Capital USA Inc., wrote in a Sept. 4 note to clients.
The Standard & Poor’s 500 Utility Index has declined 3.8 percent since the start of August while the broader index rose 6.6 percent, according to data compiled by Bloomberg.