Zero Utility Advancers as Rising Treasury Yields Sweep the Sector

Selling across the Utilities sector was broad and uniform on Friday, September 18, with 0.0% of the stocks in the group advancing. The sector finished at -1.4%, matching an equal-weighted reading of -1.4% and demonstrating that smaller utility operators fell alongside the largest industry names. The sector's primary exchange-traded fund, Utilities Select Sector SPDR Fund (XLU), closed -1.4% as its steepest decliner, Constellation Energy Corp (-3.1%), led the drop while even the session's best-performing members, The AES Corporation (-0.1%) and Edison International (-0.4%), ended lower. Only 23.7% of the fund's graded weight sits in companies earning an A or B quality grade. That widespread decline came as the 10-year Treasury yield rose 5.3 basis points to 5%, putting immediate pressure on rate-sensitive utilities.

Reporting on the day linked the weakness to rising bond yields. Rebounding Treasury yields pressured dividend-paying utilities and pushed the sector to the bottom of the market. Global bond yields climbed after the Bank of Japan raised interest rates, with quarterly options expiration adding to market volatility. At the same time, the 10-year Treasury yield climbed to 5% as higher rates weighed across equity markets.

On a session where 3 of the 11 sectors rose, utilities ended near the bottom of the market. The day's retreat of -1.4% continues a longer-running decline for XLU, which closed at $41.09 and sits at -51.3% over the past twelve months. That weakness has remained steady across the medium term, with the fund posting -6.7% over the past month and -8.0% over the past six months.

Beneath the fund level, the sector displays notable quality concentration. Companies graded A or B have stronger fundamentals, and historically they have carried a lower risk of large drawdowns than companies graded D or E. With only 23.7% of the fund allocated to those top two tiers, the majority of the sector's weight remains in companies graded C, D, or E.