Main US indexes gyrate, but still red; Nasdaq down ~1.0%
Tariff reprieve likely to be extended to all USMCA-compliant goods, Lutnick says
Euro STOXX 600 index up ~0.1%
Dollar, crude decline; gold, bitcoin ~flat
U.S. 10-Year Treasury yield rises to ~4.33%
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ELECTRIC UTILITIES MAY BE A CHEAP WAY TO PLAY AI
Electric utilities have a reputation as a slow growing, highly regulated industry that may not excite many investors, but they could be an inexpensive way to gain exposure to artificial intelligence, said Brian Reynolds, chief market strategist at Reynolds Strategy.
“Data centers, especially those related to AI, are beginning to drive enormous demand for electricity, and regulators are keeping the profit margin on that growth high,” Reynolds said in a report on Thursday.
“Electricity plant growth has outpaced cumulative nominal GDP growth by more than 3% total over the last three years!,” he added. That gap also appears to be larger for utilities that have exposures to AI and may expand as AI grows.
State regulators allow electricity prices to remain high to fund additional capacity for data centers. “Households and businesses seem to be paying for AI whether they want it or not, and that point does not seem to be well-known among the population,” Reynolds said.
But while utilities are outperforming the economy on a fundamental basis, the S&P 500 Utilities index .SPLRCU has dramatically underperformed the S&P 500 .SPX, Reynolds notes, adding that momentum is also currently poor due to interest rate cut disappointments.
Thus, utilities may be an inexpensive way to gain exposure to AI and Reynolds recommends spending this spring and early summer identifying companies to buy on weakness.
(Karen Brettell)
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FOR THURSDAY'S EARLIER LIVE MARKETS POSTS:
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GERMANY'S FISCAL OVERHAUL COULD BUFFER EUROZONE IF US TARIFFS MATERIALISE - UBS - CLICK HERE
LUXURY: ARE WE OUT OF THE WOODS? - CLICK HERE
STOXX SLIPS DESPITE MODERATING TARIFF FEARS AND POSITIVE EARNINGS - CLICK HERE
EUROPE BEFORE THE BELL: FUTURES UP AS TARIFF TENSIONS EASE - CLICK HERE
ECB'S LAST EASY DECISION - CLICK HERE
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