Utilities sector is up some 21% in the first half of 2016
by Ellie Ismailidou and Anora Mahmudova
Buying the stocks that Wall Street calls boring has paid off over the past six months—but now this “defensive” strategy is starting to look pretty risky.
Utilities, a sector traditionally viewed as a safety play in times of market turmoil, have risen 21.2% in the first half of 2016—the sector’s best first-half performance in over 25 years.
But if you ask some analysts, the run-up in prices leaves the sector extremely overextended and valuations dangerously high; some analysts believe the sector is in bubble territory.
Are some investors already catching on? Thursday’s decline marked the utilities sector’s sharpest daily drop, at 1.8%, in seven weeks.