Investors have turned out the lights on electric companies this year. FirstEnergy and other utilities began to slide in May after Federal Reserve Chairman Ben Bernanke suggested that the central bank could begin go to pull back on its stimulus measures.
Investors seeking income typically favor utility stocks for their high dividend yields. So the stocks had done well over the past several years as the Fed kept interest rates low. But after Bernanke's comments sent bond yields spiking,FirstEnergy (FE) and other utility stocks didn't boast the same appeal.
Plus, investors also shifted out of defensive sectors like utilities, which are known to be slow and steady earnings growers even in periods of economic stress, to more dynamic sectors like technology and industrials.
FirstEnergy, which serves 6 million customers across the Midwest and the Mid-Atlantic, also got hit after the company posted a nearly 50% drop in earnings for the third quarter due to cooler than usual summer temperatures cutting the need for air conditioning. Shares have recently been trading at their lowest levels in a decade. --H.Y.
