NEW YORK, January 3, 2026, 13:39 ET — Market closed
U.S. utility stocks started 2026 on a stronger footing, with the Utilities Select Sector SPDR Fund (XLU) rising 1.2% on Friday to $43.18. The ETF traded between $42.66 and $43.38, setting up near-term chart levels traders often watch for support and resistance.
The move matters because utilities are often treated as “bond proxies” — a shorthand for dividend-heavy stocks that can become less attractive when interest rates rise. U.S. Treasury yields still climbed, with the 10-year yield up 3.8 basis points (one basis point is 0.01 percentage point) to 4.191%, even as investors rotated toward value and power-demand beneficiaries linked to AI buildouts. “Value is outperforming growth and AI infrastructure is up,” said Jed Ellerbroek, a portfolio manager at Argent Capital. Reuters
Rate expectations remain the swing factor for the sector in early January. A key test is next week’s U.S. jobs report, with traders parsing whether the Federal Reserve stays cautious after cutting rates at its last three meetings of 2025; Reuters reported Fed funds futures implied little chance of a cut at the late-January meeting, with close to a 50% chance of a quarter-point reduction in March.
Broader markets were steadier than sector leadership suggested. The Dow and S&P 500 ended higher on Friday while the Nasdaq slipped slightly, with chipmakers leading and heavyweight tech names such as Apple and Microsoft weighing on the major indexes; utilities and industrials posted gains.
XLU is widely used as a read-through for “utilities stocks” because it aims to track the Utilities Select Sector Index, a slice of the S&P 500’s utilities group. State Street Global Advisors
In company-specific news, NextEra Energy disclosed in a Form 8-K — a current report filed with U.S. regulators to share material updates — that executives would attend investor meetings through January and plan to reiterate its longer-term targets. A filing showed NextEra kept its adjusted earnings-per-share outlook unchanged at $3.62 to $3.70 for 2025 and $3.92 to $4.02 for 2026, alongside dividend-per-share growth expectations of about 10% annually through 2026 off a 2024 base.
Among large-cap utilities, NextEra ended Friday up about 0.8%, while Dominion Energy gained about 1.1% and Exelon rose roughly 0.7%. Duke Energy added about 0.2% and Southern Co was little changed.
For investors, the cross-current is clear: utilities are benefiting from the narrative around rising electricity demand and grid investment, but the group’s valuations still react quickly to moves in yields. Friday’s gain alongside higher Treasury yields underscored that flows and positioning — not just rates — can drive day-to-day performance.
What traders are watching next is whether incoming data pushes yields higher again. A firmer rate backdrop typically tightens the relative appeal of utility dividends versus risk-free bonds, while softer growth or inflation prints can tilt demand back toward defensive, income-oriented shares.
Before the next session, focus turns to U.S. labor-market and inflation releases that often reset rate pricing. The Bureau of Labor Statistics has scheduled the Employment Situation report for December 2025 for 8:30 a.m. ET on January 9, and the Consumer Price Index for December 2025 for 8:30 a.m. ET on January 13.
Markets also have a late-January policy waypoint. The Federal Reserve’s calendar shows the next FOMC meeting is set for January 27–28.
Utilities investors will be listening for any shift in capital-spending plans and long-run earnings and dividend frameworks as management teams meet investors through January — with NextEra’s reiterated targets setting an early marker for the sector.
