Utilities sector outperforms in October as Exelon leads the gainers and NRG lags

The utilities sector (XLU) outperformed the broader market during October, gaining 10.12%, compared with a 0.94% decline in the S&P 500.

Seeking Alpha analyst Louis Gerard said the decline in long-term Treasury yields supported the sector during the month. Government bonds rallied as investors moved toward safer assets amid a selloff in AI and technology stocks, with the 10-year Treasury yield falling 29 basis points to around 5%. Lower yields generally benefit utilities, which are often viewed as bond proxies because of their stable cash flows and dividend payouts.

Gerard also highlighted a clear divide in the sector's performance: all five of the top gainers were regulated electric utilities or water companies, while the three decliners were merchant power or AI-linked names.

Utilities Sector Scorecard

• Sector return: +9.38%
• Best performer: Exelon Corporation (EXC) (+14.07%)
• Worst performer: NRG Energy (NRG) (-1.84%)

Top utility sector performers of October

Exelon Corporation (EXC) led the sector's gainers, rising 14.07% during the month. Gerard identified Q3 results as the stronger driver, with EPS coming in above expectations and the company narrowing its full-year 2026 adjusted EPS guidance to $2.85-$2.91. Management also indicated that EPS growth through 2029 should be near the upper end of its 5%-7% target range.

WEC Energy Group (WEC) gained 14.05%, with Q3 results serving as the key catalyst. The company reported EPS of $1.18, with its Wisconsin segment driving the earnings beat. Gerard attributed the segment's strength to rate orders effective January 1, a warmer summer, and contributions from massive customers.

CenterPoint Energy (CNP) advanced 13.76% during the month. Gerard highlighted its Q3 non-GAAP EPS of $0.53 and the increase in full-year guidance to $1.90-$1.92. He also pointed to the company's increased capital investment plan and extension of its expected annual EPS growth target of 7%-9% through 2030.

Here are the top five gainers of the month:

• Exelon Corporation (EXC): +14.07%, Quant rating: Hold (3.15/5)
• WEC Energy Group (WEC): +14.05%, Quant rating: Buy (3.70/5)
• CenterPoint Energy (CNP): +13.76%, Quant rating: Hold (3.09/5)
• Xcel Energy (XEL): +13.15%, Quant rating: Hold (3.21/5)
• American Water Works (AWK): +13.04%, Quant rating: Hold (3.04/5)

Top utility sector detractors of October

NRG Energy (NRG) was the sector's biggest decliner, falling 1.84% during the month. Gerard attributed the weakness partly to a broader selloff in AI-linked power stocks. On October 14, NRG fell 5.9% alongside Vistra and Constellation Energy as concerns about CoreWeave's debt raised questions about the sustainability of AI-related power demand and spending.

Vistra Corp. (VST) also ended the month lower, declining 1.82%. Gerard noted that the stock was generally higher during the month, supported by strength across nuclear power names following Constellation Energy's Google agreement. However, Vistra fell alongside NRG and Constellation on October 14 amid concerns about CoreWeave's debt. Meta's earnings later revived concerns about AI spending, particularly given Vistra's 20-year nuclear power purchase agreement with Meta.

The AES Corporation (AES) recorded a smaller decline of 0.37%. Gerard described AES as a deal-pinned stock, with its performance largely tied to developments surrounding its planned $15-per-share acquisition by a consortium led by Global Infrastructure Partners and EQT, rather than broader market developments. The company received European Union antitrust approval for the transaction during the month.

Here are the top three detractors of the month:

• NRG Energy (NRG): -1.84%, Quant rating: Sell (1.89/5)
• Vistra Corp. (VST): -1.82%, Quant rating: Hold (2.98/5)
• The AES Corporation (AES): -0.37%, Quant rating: Hold (3.02/5)