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Are Utilities the New AI Stocks?

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Are Utilities the New AI Stocks?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Are Utilities the New AI Stocks?
  • Chart – Utilities Overtakes Tech Stocks in YTD Performance

Stock futures are slightly lower this morning while international markets were mixed in quiet trading overnight.

Economically, the Organization for Economic Cooperation and Development (OECD) raised their 2024 global growth forecast to 3.2% vs. 3.1% in May which saw yields edge higher overnight.

Looking into today’s session, there is one economic report to watch: New Home Sales (E: 700K) and one Fed speaker on the calendar but not until the close: Kugler (4:00 p.m. ET).

The Treasury will hold a 4-Month Bill auction at 11:30 a.m. ET and a 5-Yr Note auction at 1:00 p.m. ET. The Note auction has more potential to move markets, especially if demand is weak and yields move higher in reaction (negative for stocks), however the Bill auction could also move short-duration yields and impact stocks today.

Finally, there is one notable tech company reporting earnings today: MU (E: $1.15), but barring a big surprise either way, it is unlikely to move the broader stock market.

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Utilities, Staples and Healthcare

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Utilities, Staples and Healthcare: Tom Essaye Quoted in Morningstar

Defensive stocks have traded poorly this year, but this strategist says they are in a sweet spot | Morningstar

A ‘growth scare’ will push Treasury yields lower and increase demand for safe-haven assets in equities: Sevens Report Research

U.S. stocks in the underperforming defensive sectors may be due for a comeback in the coming months as fears of an economic slowdown will push Treasury yields lower and increase demand for safe-haven assets in equities, according to Sevens Report Research.

“I do believe that we will have an economic growth scare in the coming months. That doesn’t mean I’m saying we’ll have a recession, but I do believe we have a growth scare looming and as such, I will begin to ‘nibble’ on utilities, staples and healthcare on the long side starting today, and I’ll rotate out of cyclicals as they’ve benefitted from solid growth and higher rates,” said Tom Essaye, the founder and the president of Sevens Report Research, in a Tuesday note.

Also, click here to view the full Morningstar article published on October 10th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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