Utility stocks outperform S&P 500 with 'no signs of recession' in power demand

Utility stocks person outperformed the S&P 500 (^GSPC) twelvemonth to day arsenic powerfulness request surges, adjacent arsenic tariff uncertainty raises questions astir a recession.

The S&P 500 Utilities Select ETF (XLU) is up much than 6% compared to a 4% driblet for the broad-based index, an 8% driblet for Tech (XLK), and an 11% diminution successful Consumer Discretionary (XLC) stocks.

Even though inferior stocks dipped on with the remainder of the marketplace pursuing President Trump's tariff argumentation announcement connected April 2, their driblet was not arsenic terrible arsenic different sectors.

"By and large, utilities look to beryllium minimally impacted by tariffs," CFRA expert Daniel Rich told Yahoo Finance. "The immense bulk of inferior companies' superior concern budgets trust connected US labor, materials, and energy."

The sector's outperformance comes connected the heels of a 23% summation successful 2024 arsenic information halfway maturation from an artificial quality roar and efforts to onshore manufacturing spurred accrued request for electricity.

That request is going beardown contempt fears of a recession stemming from the planetary commercialized war.

“No signs of recession successful powerfulness demand,” noted Goldman Sachs analysts connected Tuesday night. “Year to date, US powerfulness request has accrued by 5.5% twelvemonth implicit twelvemonth vs. the mean yearly maturation complaint of 0.6% successful the past decade.”

The analysts said each powerfulness request sectors person contributed to this growth, including residential.

The Energy Information Administration expects electricity request to turn fastest successful the concern assemblage this twelvemonth arsenic caller semiconductor and artillery manufacturing operations travel online. Data halfway energy consumption is besides expected to increase.

On Tuesday, vigor holding elephantine Duke Energy (DUK) announced it signed agreements for astir 1 gigawatt of information halfway projects involving 2 customers successful April.

"We are projecting load maturation astatine levels I’ve ne'er seen successful my 30-year career, which volition thrust much than a decennary of grounds infrastructure build," Duke CEO Harry Sideris told analysts during the company's net call, referring to expanding powerfulness request successful the US.

Duke Energy banal is up 13% twelvemonth to date. Its peers the Southern Company (SO) and Exelon (EXC) are besides up 12% and 23%, respectively.

On Wednesday, Google (GOOG, GOOGL) announced a collaboration with precocious atomic task developer Elementl Power, yet different motion of Big Tech's insatiable appetite for electricity

This follows a tie-up successful September betwixt Microsoft (MSFT) and vigor elephantine Constellation Energy (CEG), arsenic good arsenic Amazon's (AMZN) purchase of a information halfway campus from vigor supplier Talen Energy (TLN) past March.