Utilities (XLU) vs Consumer Staples (XLP)
XLU (Utilities Select Sector SPDR Fund) and XLP (Consumer Staples Select Sector SPDR Fund) are both defensive sectors but with different drivers. April 2026: XLU $46 (top weights NextEra 14.01 percent, Southern 7.23 percent, Duke 6.96 percent, Constellation 6.38 percent); XLP $80 (top weights P&G ~14 percent, Costco ~12 percent, KO ~9 percent, WMT ~9 percent).
Also known as: Utilities (XLU) (ETF_XLU, utilities) · Consumer Staples (XLP) (ETF_XLP, consumer staples)
Why This Comparison Matters
XLU (Utilities Select Sector SPDR Fund) and XLP (Consumer Staples Select Sector SPDR Fund) are both defensive sectors but with different drivers. April 2026: XLU $46 (top weights NextEra 14.01 percent, Southern 7.23 percent, Duke 6.96 percent, Constellation 6.38 percent); XLP $80 (top weights P&G ~14 percent, Costco ~12 percent, KO ~9 percent, WMT ~9 percent). XLU rate-sensitive defensive + AI data center demand growth. XLP consumer-defensive + retail strength + GLP-1 headwinds. The pair captures bond-proxy vs consumption-defensive leadership.
The April 2026 Configuration
XLU $46. XLP $80. XLU/XLP ratio approximately 0.575.
XLU rallied substantially in 2024-2026 on AI data center demand (NextEra +26% past 6 months; Constellation +50% in 2024-2025). Hyperscaler $400B+ AI capex driving electricity demand growth.
XLP performance: Costco +30% past 12 months (membership growth + e-commerce); Walmart +20%; PG/KO/PEP modest. GLP-1 affecting food/beverage volumes.
The combined April 2026 reading: both defensive sectors gaining from different catalysts. XLU on AI electricity demand. XLP on retail strength offsetting traditional staples GLP-1 headwinds. XLU outperforming XLP modestly due to stronger AI capex narrative.
Bond Proxy vs Consumer Defensive
XLU and XLP both defensive but with different mechanisms.
XLU bond proxy: regulated returns + dividend yield ~3% + AI data center growth subsector. Most rate-sensitive of equities. Pre-2024 -0.50 to -0.65 correlation with 10Y; 2024-2026 weakened to -0.20 to -0.35 (AI override).
XLP consumer-defensive: pricing power + stable demand + retail growth (Costco/Walmart). Modest rate sensitivity (~3-5% decline per 100bp 10Y rise). Pre-2024 -0.30 to -0.45 correlation; 2024-2026 weakened to -0.20 to -0.40 (GLP-1).
The practical implication: XLU more rate-sensitive than XLP. XLU/XLP ratio expansion during falling rates. Compression during rising rates.
How XLU and XLP Diverge
Falling rates + AI capex: XLU outperforms XLP. Current 2024-2026 era. XLU benefits from both bond proxy + AI tailwind.
Rising rates + inflation: XLP outperforms XLU. XLU duration drag; XLP pricing power benefit.
Both fall: severe stress (XLU more rate-driven, XLP more cyclical).
Both rally: defensive bid + AI capex (current April 2026).
Long-run correlation 0.55-0.70 (positive defensive sectors).
How the Pair Performs Through Cycles
Conditional Forward Response (Tail Events)
How Consumer Staples (XLP) has historically behaved in the 5 sessions following a top-decile or bottom-decile daily move in Utilities (XLU). Computed from 1,281 aligned daily observations ending .
Following these triggers, Consumer Staples (XLP) rises 0.27% on average over the next 5 sessions, versus an unconditional baseline of +0.09%. 129 qualifying events; Consumer Staples (XLP) closed positive in 57% of them.
90-Day Statistics
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Frequently Asked Questions
What are XLU and XLP?+
XLU (Utilities Select Sector SPDR Fund) and XLP (Consumer Staples Select Sector SPDR Fund) are both defensive sectors. April 2026: XLU $46 with top weights NextEra 14.01%, Southern 7.23%, Duke 6.96%, Constellation 6.38%. XLP $80 with top weights P&G ~14%, Costco ~12%, KO ~9%, WMT ~9%, PEP ~6%. XLU/XLP ratio ~0.575. XLU rallied substantially in 2024-2026 on AI data center demand (NextEra +26% past 6 months; Constellation +50% in 2024-2025). Hyperscaler $400B+ AI capex driving electricity demand. XLP performance: Costco +30% past 12 months; Walmart +20%; PG/KO/PEP modest.
How do bond proxy and consumer defensive differ?+
XLU bond proxy: regulated returns + dividend yield ~3% + AI data center growth subsector. Most rate-sensitive of equities. Pre-2024 -0.50 to -0.65 correlation with 10Y; 2024-2026 weakened to -0.20 to -0.35 (AI override). XLP consumer-defensive: pricing power + stable demand + retail growth (Costco/Walmart). Modest rate sensitivity (~3-5% decline per 100bp 10Y rise). Pre-2024 -0.30 to -0.45 correlation; 2024-2026 weakened to -0.20 to -0.40 (GLP-1). XLU more rate-sensitive than XLP. XLU/XLP ratio expansion during falling rates. Compression during rising rates.
How do XLU and XLP diverge?+
Falling rates + AI capex: XLU outperforms XLP. Current 2024-2026 era. XLU benefits from both bond proxy + AI tailwind. Rising rates + inflation: XLP outperforms XLU. XLU duration drag; XLP pricing power benefit. Both fall: severe stress (XLU more rate-driven, XLP more cyclical). Both rally: defensive bid + AI capex (current April 2026). Long-run correlation 0.55-0.70 (positive defensive sectors).
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