NEW YORK, Jan 31, 2026, 14:05 EST — The market has closed.
- Shares in U.S. utilities dipped on Friday, pressured by a surge in long-term Treasury yields following President Donald Trump’s announcement of Kevin Warsh as his choice for Fed chair.
- A hotter-than-expected U.S. producer price reading fueled inflation concerns, leaving rate-sensitive sectors under pressure heading into February.
- The January U.S. jobs report, due Feb. 6, will be the next big data point investors watch closely for clues on the Fed’s rate-cut discussions.
U.S. utility stocks wrapped up January on a weak footing Friday, with the Utilities Select Sector SPDR ETF slipping roughly 0.2% to close at $43.25. During the session, the ETF fluctuated between $42.77 and $43.38. (Yahoo Finance)
Monday’s agenda is straightforward: watch rates, then fundamentals. Utilities deliver steady cash flows and hefty dividends, which makes them behave a lot like bonds when investors chase yield.
The link was tested after Donald Trump announced his intention to nominate Kevin Warsh to replace Jerome Powell at the Federal Reserve. Investors quickly took the pick as a hawkish signal. “Markets are calibrating” their expectations around the nomination and its impact on policy, said Michael Hans, chief investment officer at Citizens Wealth. (Reuters)
Longer-dated Treasuries bore the pressure in the bond market. Benchmark 10-year yields climbed to 4.245% on Friday, with 30-year yields last at 4.878%, pushing the yield curve steeper as long-term rates outpaced short-term ones. “If the smaller balance sheet becomes a primary focus… that would put upward pressure on your longer-term bond yields,” said Jim Barnes, director of fixed income at Bryn Mawr Trust. (Fidelity Fixed Income)
Inflation data heated up markets. The U.S. Department of Labor reported a 0.5% rise in the producer price index for December, well above economists’ 0.2% estimate. Earlier this week, the Fed held rates steady in the 3.50%-3.75% range. Carl Weinberg of High Frequency Economics noted, “This report validates the pivot of the Fed away from labor market risks back toward price stability.” (Reuters)
Fed Vice Chair for Supervision Michelle Bowman urged caution on the pace of rate changes, despite maintaining her forecast for three quarter-point cuts this year. “The labor market is fragile,” she noted. (Reuters)
In the utilities ETF, the top holdings remain steady: NextEra Energy, Southern Company, Duke Energy, and Constellation Energy, per State Street’s latest holdings data. (State Street Global Advisors)
Friday’s price moves were mixed. NextEra dipped 0.3%, Southern inched up 0.2%, Duke climbed 0.4%, but Constellation dropped 2.3% — underscoring that the “bond proxy” tag masks a range of business models within the sector.
Utilities face a familiar threat heading into next week: rising yields could weigh on dividend-heavy sectors as investors push for higher returns. Warsh’s nomination, along with new inflation clues, only sharpen the focus on that rate equation.
Friday brings the next key data release: the Bureau of Labor Statistics will publish the January employment report at 8:30 a.m. ET. A robust jobs number might drive yields up once more, adding pressure on utilities heading into the following session. (Bls)
