What is 'Dow Jones Utility Average - DJUA'

The Dow Jones Utility Average (DJUA) is one of the Dow Jones index groups that tracks the performance of a small group of prominent utility companies. It is a price-weighted average of 15 utility stocks traded in the United States. Dow Jones first created the DJUA back in 1929 after removing all utility stocks from the Dow Jones Industrial Average. The DJUA is sometimes referred to as the Dow Jones Utilities.

BREAKING DOWN 'Dow Jones Utility Average - DJUA'

The Dow Jones Utility Average (DJUA) currently includes major utility companies such as Consolidated Edison, Inc., Duke Energy Corporation, FirstEnergy Corp, American Water Works Company, Inc., and NextEra Energy, Inc.

Other investing platforms that specifically focus on utilities include the Vanguard Utilities Index Fund and the Utilities Select Sector SPDR® Fund.

The DJUA and the Dow Jones Transportation Average are assigned their own separate categories in the national investment tracking landscape. The pair is detached from all of the other industries in the U.S. equities market that are included in the Dow Jones Industrial Average.

In the U.S. economic landscape, the utilities sector encompasses companies and public entities that produce and deliver some type of utility resource, which could include electricity and natural gas, as well as cooled air or steam. This is different from the energy sector, although the two may sound very similar, and some companies may conduct activities that fall into both categories. The energy sector covers companies that are engaged in exploration and development related to natural resources such as coal, natural gas, and oil.

DJUA and utility sector as economic indicators

Economic analysts tend to pay close attention to developments and trends in the utility sector because this sector can be indicative of trends in the economy as a whole. With their major infrastructure and high overhead, utility companies typically carry a lot of debt. This characteristic can make them a reliable early indicator to predict general economic trends in the near future. By carefully observing movements in this sector, economists can draw conclusions about upcoming market trends and interest rate changes.

The utility average tends to decline when investors expect rising interest rates. Utilities tend to borrow a lot of money and, consequently, are more sensitive to changes in interest rates.

Utility stocks are high-yield investments that are subject to interest rate risk. These companies and the sector as a whole are also vulnerable to environmental regulations and government developments that can have a significant impact on their operations and profit potential.
 

RELATED TERMS
  1. Utilities Sector

    The utilities sector encompasses stocks from electric, gas, water ...
  2. Utility

    Utility is an economic term referring to the total satisfaction ...
  3. Electric Utilities Industry ETF

    An exchange-traded fund that invests in companies which generate ...
  4. Total Utility

    The aggregate level of satisfaction or fulfillment that a consumer ...
  5. Dow Jones Industrial Average - ...

    The Dow Jones Industrial Average is a price-weighted average ...
  6. Capacity Utilization Rate

    A metric used to measure the rate at which potential output levels ...
Related Articles
  1. Investing

    The 2016 Outlook for Utilities (XLU, VPU)

    Utilities should gain ground throughout 2016, offering investors and market timers profitable opportunities in an adverse market environment.
  2. Investing

    5 Popular Utilities ETFs in 2016 (XLU, NEE)

    Discover how the five most popular utilities ETFs for 2016 can add growth and income to your portfolio. Four of these utilities ETFs outperformed the S&P 500.
  3. Investing

    How Utilities ETFs Deal With Rising Rates

    Utilities stocks and ETFs may be vulnerable to rising interest rates, but there are other factors to consider.
  4. Investing

    A Surprising Sector Is Leading in August

    While other sectors sag, utilities are heating up in August.
  5. Trading

    Invest in Utilities With These ETFs (XLU, JXI)

    The strong uptrends shown on the charts of these utility ETFs suggest now could be the time to buy.
  6. Investing

    Why Utilities are the Hottest Sector (XLU)

    The performance of utilities has made it the hottest sector this year.
  7. Investing

    XLU: Utilities Select Sector SPDR ETF

    Learn about the Utilities Select Sector SPDR ETF and the benchmark index it tracks, and understand what type of investors may be interested in the fund.
  8. Investing

    VPU Vs. XLU: Comparing Utilities ETFs

    Discover why utilities is the only U.S. stock sector that has managed to gain in early 2016, and review a comparative analysis of the Vanguard and SPDR Utilities ETFs.
  9. Insights

    Why You Need To Know About S&P Dow Jones Indices

    This Article introduces the S&P Dow Jones Indices (SPDJI), available variant categories and index trading advantages
RELATED FAQS
  1. What is a utility stock?

    Investing in difficult economic conditions requires knowledge of different stock classes. Utility stocks are one vehicle ... Read Answer >>
  2. Why is the Dow Jones Industrial Average (DJIA) price weighted?

    Learn how the Dow Jones Industrial Average has told the story of the broad market through its simple, price-weighted calculation ... Read Answer >>
  3. What are the different ways that utility is measured in economics?

    Learn about the two methods used to measure the concept of utility and how utility influences other economic models of consumer ... Read Answer >>
  4. What is the utility function and how is it calculated?

    Economists measure utility in revealed preferences by observing consumer choices and ordering consumption baskets from least ... Read Answer >>
Hot Definitions
  1. Discount Rate

    Discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from ...
  2. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  3. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  4. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  5. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
  6. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
Trading Center