Finally, if central banks start cutting rates because the economy slows too much, that would be a problem. This could put an end to the defensive mode in the stock market right now. If investors move too much money back into growth and cyclical stocks, utilities would fall, although the higher growth utilities, like the generators, might be less at risk. For the moment, however, it s not clear the Fed really needs to cut rates. And investors still like the defensive nature of electric utilities.
Electricity is an essential service, says Cody.
It is not something you are going to stop paying for if the economy slows down. And these companies get paid 12 times a year, so they have good cash flow. That is positive, because we are seeing an awful lot of volatility in other sectors like retail and technology. At the time of publication, Michael Brush did not own or control shares in any of the equities mentioned in this column. Search MSN Money tips MSN Money's editorial goal is to provide a forum for personal finance and investment ideas.