MARKET SNAPSHOT: Utilities In Play As Stock Investors Turn Skittish

By Kate Gibson

The utility sector, bashed by stock investors until recently, is getting another look as markets turn increasingly defensive in re-evaluating the economic recovery still ahead.

"With the decline in long-term interest rates, the dividends on utility companies are beginning to once again attract investors," said Paul Nolte, director of investments, Hinsdale Associates, in an early Monday note.

There has been a shift "toward more defensive issues as brewers, consumer products and soft drink companies all improve, while aerospace, media and hotels, among many others, decline. The shift, in our view, is part of the re-evaluation of the economic recovery that remains 'on the horizon,'" Nolte said.

The Utilities Select Sector SPDR Fund (XLU) has fallen 5.5% this year but is up nearly 21% since its early March low.

Consisting primarily of companies involved water and electrical power and natural gas distribution industries, components include Exelon Corp. (EXC), Southern Union Co. (SUG) and Dominion Resources Inc. (D)

On Monday, energy and materials fronted the declines, while utilities and consumer staples led the market's limited gains.

The Dow Jones Industrial Average (DJI) fell 52.98 points to 8,227.7. The S&P 500 (SPX) declined 7.46 points to 888.96, and the Nasdaq Composite (RIXF) dropped 22.98 points to 1,773.5.