Utilities have gotten the wind knocked out of them in 2026 after back-to-back annual gains. The S & P 500 utilities sector is down more than 3% year to date, a far cry from its 13% advance in 2025. In 2024, the sector jumped 20%. Much of this year’s losses came in the third quarter, when utilities tumbled 13% — marking their worst quarterly performance since Q1 2020. Utilities have had to contend with rising bond yields this year as worries around inflation have grown. The benchmark 10-year Treasury note yield climbed to 5.35% on Tuesday, its highest level since 2002. Rising rates hurt sectors like utilities because bonds typically offer a greater sense of safety. But the selling has gone far enough, according to Wolfe Research. “Everything went wrong in Q3 – interest rates jumped, the Fed tightened, CA failed to pass wildfire reforms, and election noise / data center backlash heightened even in previously safe states like Texas,” strategist Steve Fleishman wrote. Now, however, “utility stocks [are] looking affordable.” Indeed, utilities trade at around 15 times forward earnings, near the lowest multiples levels since early 2024. It’s also well below the S & P 500’s PE ratio of 19. Utilities “have tendency to bottom at a 15x P/E and we are back there now with a lot better growth that comes with it than in the past,” said Fleishman. Some stocks in the space he likes are AES , Evergy and OGE Energy .
