Utilities, Energy ETFs Jump While SPY Slips on Cooler PCE
Fed's preferred inflation gauge comes in cooler than expected, China, bitcoin ETFs jump Friday.
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XLU, XLE Lead Sector ETFs in Friday Trading
Investors expecting inflation to continue its downward trend sought fixed income alternative sectors, utilities and energy, after the PCE report revealed cooling inflation and slower personal income.
The Utilities Select Sector SPDR Fund (XLU) rose more than 1% while the Energy Select Sector SPDR Fund (XLE) jumped 2% as Friday trading was winding to a close. Both sectors outperformed the broad stock market index benchmark, the SPDR S&P 500 ETF Trust (SPY), which declined nearly 0.2% for the day.
The utilities sector, up 27% year-to-date, as measured by XLU, is the leading sector and it outperforms high-flying technology, which is up about 17% in 2024, as measured by the Technology Select Sector SPDR Fund (XLK).
Utilities companies are known for their consistent dividend payouts, which can be attractive to investors seeking income. When interest rates are low, the relative attractiveness of dividend-paying stocks increases.
Utilities are also considered a defensive sector, meaning they are less susceptible to economic downturns. This makes them a desirable investment option when interest rates are falling, as investors may seek out more stable and predictable investments.
XLU 1-Year Price Chart

Cooling Inflation Numbers Send Markets Higher
The Fed's preferred inflation gauge, the personal consumption expenditures index (PCE) came in cooler than expected, the Commerce Department reported Friday. Yearly inflation was 2.2% higher in August than last year, lower than the 2.3% rise that economists had been expecting. The cooling headline print number boosted markets Friday as investors considered the greater likelihood that the Fed would dole out more rate cuts in the future.
DIA, the SPDR Dow Jones Industrial Average ETF Trust jumped over .75% as the Dow was the highest of all the major indices. SPY, the SPDR S&P 500 ETF Trust rose .25% while tech-heavy QQQ, the Invesco QQQ Trust sank just over .10% as investors considered putting their money to work elsewhere.
China Stimulus Continues to Boost China ETFs
China ETFs looked poised to end the week higher after China's stimulus package — designed to help its faltering economy and boost its stock market — was embraced by investors. The largest China ETF the IShares MSCI China ETF (MCHI) popped roughly 1.75% Friday. Year to date, the fund has risen more than 25%. FXI, the IShares Trust - China Large-Cap ETF edged .50% higher.
KWEB, the KraneShares CSI China Internet ETF soared Friday, logging a 3.6% gain, thanks partly to a larger allocation of Alibaba, which jumped roughly 3.25%. The fund, which has had more than $1 billion in outflows so far this year saw a turnaround over the past week, raking in roughly $30 million, according to etf.com data.

Bitcoin ETFs Jump
Bitcoin prices have rallied after the Fed's rate cuts, sending spot bitcoin ETFs even higher Friday on the cooler inflation reading. Bitcoin prices have risen to more than $66,000, its highest level since March, according to data from CoinMarketCap. IBIT, the IShares Bitcoin Trust and GBTC, the Grayscale Bitcoin Trust ETF both rose over 2.5%.
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