Utilities stocks are at their most oversold levels in years: Only ~25% of the S&P 500 utility sector stocks are now trading above their 200-day moving average, the lowest proportion since February 2024. This marks a sharp reversal from ~90% recorded in July. Utilities have gone from one of the market’s strongest groups, after gaining +11.5% through February, to one of its weakest, with the sector now up only +2.3% year-to-date, putting it on track for its worst year relative to the S&P 500 since 2023. This comes as rising Treasury yields are making dividends from utility stocks less attractive while also raising borrowing costs for the capital-intensive sector. The 10Y Treasury yield is now 1.84 percentage points higher than the dividend yield of S&P 500 utilities, near the widest spread since 2007, after peaking at 2.00 percentage points in July. Investor demand for defensive stocks is fading.(The Kobeissi Letter)