now isn’t a good time to buy utility stocks strategists at truist said citing a web of factors that span recent trading patterns and the economic backdrop the bank’s investment strategy team headed by keith lerner cut their view of the sector to neutral from overweight “technical trends have weakened recently and fundamentals and valuations are mixed warranting a neutral view” the team wrote in a research note those elements are all connected of course but the technical picture helps illustrate how investors see the situation the utilities select sector spdr exchangetraded fund ticker xlu has risen to around 77 a share three times this year each time facing selling pressure at that level that knocked the price down it is currently hovering at around 63 after falling from about 77 in mid september to a new low for the year of near 61 in early october the point is that there are few buyers at the resistance level the selling continued even as the price had dropped that signifies weak interest in stocks in the sector the utilities select etf is outperforming the sp 500 with a loss of11 compared with the market benchmark’s 23 slide but it is no longer as far ahead as it was earlier in the year the reason for that is fundamental utility stocks had run up to start the year because they’re defensive people and businesses always need utilities like power and gas so utility companies’ sales and earnings streams are fairly stable unlike many others sectors which see declines in profits when economic demand takes a hit utility stocks have made sense as worries about the economy have mounted in response to the federal reserve’s policy of fighting inflation by raising interest rates to reduce demand for goods and services the problem is that the utility stocks had gained so much that the dividends they offered shrank significantly relative to the cost of the shares even with the latest decline in utilitystock prices the utilities select etf’s dividend yield is still low at 285 according to factset that can’t lure in buyers when the ultrasafe 10year treasury note yields close to 4 we flagged that issue about a month ago barron’s andrew bary wrote in mid september that utility dividend yields were too low and that it was time to move on from buying the stocks for the moment right now either the 10year yield has to decline or utility stock prices have to keep dropping in order for share prices in the sector to start performing well