S&P 500 has advanced 32% since the March bottom, the Utilities Sector SPDR is up just 15%.
Reasons For Utilities Underperformance
1. Weak Demand: The weak economy has quashed demand.
2. Governmental Interference: Because of the the recession, most state regulators are reluctant to grant healthy rate increases.
3. Investor Preference: Inves... have been buying more volatile stocks.
4. Competition By Bonds: The up-tick in bond yields is also pressuring utility stocks.
5. Worries about Cap & Trade
If there is another explosion in electrical utilities' energy costs, many utilities will have difficulties passing these costs on (their regulators will be slow in allowing price increases).