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On Thursday, utility companies experienced widespread losses in response to a U.S. inflation report for December that exceeded expectations.
The U.S. Labor Department reported that core prices, excluding volatile food and energy prices, rose 3.9% from a year ago. This figure slightly surpassed economists’ predictions of a 3.8% increase.
Shares of power producers (NYSEARCA:XLU) plummeted, dominating the list of the day’s biggest losers on the S&P 500: AES Corp. (AES) -4.5%, WEC Energy (WEC) -4%, Alliant Energy (LNT) -3.5%, Pinnacle West (PNW) -3.4%, Consolidated Edison (ED) -3.2%, PG&E (PCG) -3.2%, CenterPoint Energy (CNP) -3.1%, NiSource (NI) -3%, CMS Energy (CMS) -3%.
The sector faced losses despite a drop in Treasury yields to their lowest in weeks. Traders appeared to overlook the uptick in inflation, focusing instead on the probability of easing price gains in the future.
The yield on the two-year Treasury declined by 11 basis points to 4.258%, marking its lowest level since December 29. Similarly, the yield on the 10-year Treasury dropped by 5.5 bps to 3.974%, its lowest since January 3, and the 30-year yield sank by 2 bps to 4.18%.