Utilities Gain in Broad Advance While Quality Mix Stays Low

On Tuesday, September 8, broad strength lifted the Utilities sector as 90.3% of its members advanced, helping Utilities Select Sector SPDR Fund (XLU), an exchange-traded fund tracking the sector, finish +0.9% at $43.45. The equal-weighted sector move of +0.9% matched the cap-weighted +0.9%, showing that smaller utilities shared equally in the advance rather than a few heavyweights carrying the group. The push came on a day when just 2 of the 11 sectors rose across the broader market, as oil prices climbed and renewed inflation worries weighed on the broader indexes.

Drivers and Breadth The advance was led by Edison International (+4.5%) and PG&E Corp (+3.6%), which recorded the strongest gains among the sector's holdings. Selling was scarce across the group, with FirstEnergy Corporation (-0.7%) marking the only notable decline. Our sources show no reported company-specific driver for the session's top gainers, leaving the move aligned with broader sector participation.

Quality and Fund Structure Despite the session's broad advance, EasyAlpha's quality analysis highlights structural caution across the sector. EasyAlpha grades each company against its industry peers. Among the stocks we grade in the sector, only 29.0% of the fund's weight sits in companies earning an A or B quality grade. Historically, companies graded A or B have shown stronger fundamentals and lower risk of severe drawdowns compared to those graded D or E.

Longer-Term Context The single-day gain comes against a challenging multi-month backdrop for the group. Over the past month, XLU is -0.4%, while across recent months the fund sits -6.3%. Extending the window further shows the fund is -6.7% over the past six months and -47.4% over the past twelve months.