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Shares of power producers provided a safe-haven trade Thursday as investors rotated into defensive sectors after downbeat U.S. economic data rekindled fears of a potential recession.
The Institute for Supply Management reported its index measuring factory activity in the U.S. for July fell to 46.8%, down 1.7 percentage points from June and below the Dow Jones estimate for 48.9%.
The U.S. S&P Global manufacturing PMI for July dropped to 49.6 from a preliminary 51.6 reading in June, as new orders fell for the first time in three months, and June construction spending came in lower for a second straight month.
Following the batch of disappointing data, the 10-year Treasury yield fell below 4% for the first time since February.
The S&P Utilities Index jumped to its best level in two-and-a-half years, with several power company stocks to 52-week highs, as fixed income yields tumbled and investors sought the safety of less-volatile stocks offering steady dividends.
Among utility stocks rallying to 52-week highs: Southern Co. (NYSE:SO) +4.8%, Pinnacle West (PNW) +3.9%, Dominion Energy (D) +3.7%, American Electric Power (AEP) +3.2%, Duke Energy (DUK) +3%, Consolidated Edison (ED) +2.7%, CMS Energy (CMS) +2.4%, DTE Energy (DTE) +2.3%, Edison International (EIX) +2%, FirstEnergy (FE) +1.9%, Sempra (SRE) +1.7%, NiSource (NI) +1.6%.
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