Utilities rebound from yield-driven slump, but resistance lies ahead

what happened

Reuters notes that utilities have had a volatile year. The S&P 500 utilities sector climbed more than 11% to record highs in February and April, then fell over 17% from its February 27 closing peak to its September 28 low as Treasury yields jumped. The group's relative strength versus the S&P 500 hit an all-time low the day before that trough, based on LSEG data dating back to 1989.

Yields on the US 10-year bond topped out at 5.3645% on October 7, a level not seen since 2002, roughly a week after utilities bottomed. As the yield slipped below 5%, the sector gained more than 9% through last Thursday. Even after a Friday dip to 432.47, it remains about 10.5% under its record close and has now logged four consecutive weekly advances, its longest winning run since October 2025.

Technical traders are now watching resistance in the 435.53 to 440 zone, which includes the 38.2% retracement at 437.47 and the 100-day and 200-day averages near 440 and 449. Support sits at 422.86 and 419.36. If the latter fails, attention may shift to 408.53 and 408.25, and below that to 396.77.

why it matters

Utilities are sensitive to bond yields, so the sector's direction often mirrors moves in Treasuries. The sector's 50-day correlation with yields reached -0.93 on October 7, showing how tightly the two have moved in opposite directions. A renewed rise in yields could therefore reverse the recent recovery.

market impact

S&P 500 utilities: they move against Treasury yields, so bond-market swings set the tone for the sector

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instruments