Utility Stocks Rallying Ahead of U.S. Federal Reserve Decisionby and
Utilities climbed on Wednesday ahead of a Federal Reserve meeting that is widely expected to result in the first increase in U.S. interest rates since 2006. NextEra Energy Inc. led gains, rising as much as 4.6 percent.
Sanford C. Bernstein & Co. issued a report this week saying returns on U.S. utility stocks haven’t shown a strong correlation with changes in short-term interest rates in almost 40 years and are more connected to changes in long-term bond yields. Bernstein analysts including Hugh Wynne said in the note that they’re “skeptical that Fed tightening will lead to a marked increase in long treasury yields.”
An investor would be “buying today to be invested for the next few months in anticipation that the uncertainty of a fed action is off the table,” Kit Konolige, a utilities analyst for Bloomberg Intelligence in New York, said by phone Wednesday.
NextEra shares were up 4.3 percent to $102.92 at 12:51 p.m. New York time. NiSource Inc. gained 3 percent to $19.27. The 29-member Standard and Poor’s 500 utilities index rose by as much as 2 percent.