Investors went in search of yield in November and December, driving utility stocks higher in the process. The Utilities Select Sector SPDR Fund (XLU) is up over 12% since the beginning of November compared to an 8% gain for the SPDR S&P 500 Fund (SPY) over the same time period.
While the rest of the market is taking a breather from the extended rally, utilities are pulling ahead. Utilities have been the best performing sector over the past 4 weeks with the Utilities Select Sector SPDR Fund (XLU) up nearly 9% compared to 4% for the broader market.
Utilities have joined the other major sectors in a broad equity market decline that began in January. The Utilities Select Sector SPDR Fund (Ticker: XLU) began selling off in February and yesterday closed below October lows at $24.55.
The day after we posted Looking for a Bottom? Start with Sectors, the market tested a new 52-week low and sector performance was telling.
With the US equity market recently hitting a new 52-week low, investors are still waiting for the market to bottom out.
Max and Erma are well on their towards saving for retirement with a well-diversified portfolio. Although they have taken a hit in the recent bear market, they still have a substantial nest egg and want to protect their investments against any inflation threats that may arise from the massive monetary and fiscal stimulus actions taken by the U.S. and other large economies.