So far this year, utility stocks have picked up where they left off 2019. The Dow Jones Utility Average gained 6.8 percent in January, its best performance for the year’s opening month since 2000.
That year, the DJUA scored an 11.4 percent January gain en route to an annual return of 51.1 percent. Coming off losses from 1999 definitely helped that year. But as our table “January Effect” shows, there is a clear record of opening month gains portending fatter returns the rest of the year. In fact, the only year where a big initial gain degenerated into real losses was in 1987.
That was an extraordinary year at the beginning of my career. Utilities rallied hard with the rest of the market in January before taking a tumble starting in February, as the then Alan Greenspan-led Federal Reserve raised interest rates to curb accelerating inflation.
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