Looking for a RED-HOT market sector to invest in?

Then check out the MoneyShow Chart of the Week below. It shows the year-to-date performance of several benchmark sector ETFs. And the one sporting a 13.8% return is NOT the Technology Select Sector SPDR Fund (XLK). It’s the UTILIITIES Select Sector SPDR Fund (XLU)!

Data by YCharts

What makes this so interesting? Utilities typically perform best when A) Interest rates are falling B) The economy is weakening or in recession and C) Investors are playing defense in their portfolios. They also tend to trade in line with other defensive, yield-oriented sectors, like consumer staples and real estate.

But if you look at the chart, you’ll see the Consumer Staples Select Sector SPDR Fund (XLP, in orange) is up just 7.5%. And the Real Estate Select Sector SPDR Fund (XLRE, in light blue) is DOWN 4.9%. Plus, the 10-year Treasury yield has climbed back to around 4.4% from 3.95% at the beginning of 2024.

So, what gives? What’s driving the market action?

Artificial Intelligence! Many investors are turning to “utes” as an AI proxy play, a trend some of our MoneyShow expert contributors have highlighted recently. Investors believe the addition of more data centers, server farms, and other AI-enabling technology will drive demand for electricity to power it. That, in turn, will boost sales and earnings for the utilities that provide the juice.

So, if you’re looking for stocks with positive momentum and gains potential, you just might find them in a novel, new corner of the market!