Utilities sector exchange traded funds jumped Monday, leading market gains after companies like Southern Co. (NYSE: SO) and Dominion Resources (NYSE: D) revealed strong third quarter results on strong summer electricity demand to beat the heat.
The Utilities Select Sector SPDR (NYSEArca: XLU) rose 2.3% Monday, surging back above its short-term 50-day simple moving average.
Supporting the utilities sector, the earnings season revealed utility companies generated high revenue and profits on warmer weather demand, which drove up power demand.
For instance, Southern Co. revealed total electricity sales volume increased 5.7% with retail electricity sales up 3.2% and wholesale volume was 18% higher, reports Austen Hufford for the Wall Street Journal.
Southern Co. revealed better-than-expected profit of $1.16 billion, compared to $970 million a year prior, with per-share earnings up to $1.18 from $1.05 and revenue surging 16% to $6.26 billion.
SO shares gained 2.7% Monday.
Additionally, Dominion Resources also revealed better-than-expected third quarter results on higher power demand during the warm summer months. Dominion showed earnings per share of $1.14, compared to $1.03 in the third quarter of last year, along with profits of $716 million, compared to $611 million last year.
D shares advanced 2.5% on Monday.
XLU includes a hefty 8.2% tilt toward Southern Co. and 7.6% to Dominion Resources.
[related_stories]Investors may have also increased bets into the bond-esque utilities sector as a more conservative play on the equities market, following the FBI’s renewed probe into Democratic presidential runner Hillary Clinton’s private email correspondence.
The renewed political risk weighed on American’s perception of a Clinton presidency, which dragged on the equities market and added to uncertainty.
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The added equity volatility also slightly diminished bets of a Federal Reserve rate hike in December, which would further help support the bond-like utilities sector.
For more information on the utilities sector, visit our utilities category.
Utilities Select Sector SPDR