Minneapolis-based Xcel Energy is an electric and natural gas utility with regulated operations in eight Western and Midwestern states. XEL provides generation, distribution, and transmission services and has a generating capacity of about 20,600 megawatts. The company provides utility services to 3.8 million electricity customers and 2.1 million natural gas customers through its regulated utilities. At the end of 1H24, electricity accounts for about 80% of total operating revenues. In addition to providing power, XEL has pipeline infrastructure and natural gas storage/compression operations. About one-fourth of customers are in the Denver area and are served by subsidiary PSCo. While the company has benefited from favorable regulatory decisions, we note that Colorado gas rates are largely tied to wholesale rates, which can stress overall earnings growth. The company's 2023 fuel mix is: coal, 19%; nuclear, 10%; natural gas, 30%; wind, 32%; solar, 4%; and other/biomass, 4%. XEL is ahead of its competitors in the use of biomass and wood-pellet generation. Management expects to phase out the use of coal by 2034, roughly in line with peers. XEL shares are a component of the S&P 500 and its market cap is $41 billion.

U.S stocks closed higher on Thursday. The S&P 500 rose 0.5%, the Dow gained 1.1% and the Nasdaq closed just above the flat line. The Communication sector was the biggest decliner and Utilities led the market higher.

Xcel Energy manages utilities serving 3.8 million electric customers and 2.2 million natural gas customers in eight states. Its utilities are Northern States Power, which serves customers in Minnesota, North Dakota, South Dakota, Wisconsin, and Michigan; Public Service Company of Colorado; and Southwestern Public Service Company, which serves customers in Texas and New Mexico. It is one of the largest renewable energy suppliers in the US with more than half of its electricity sales coming from carbon-free energy.

The Federal Reserve's favorite inflation indicator, the PCE Price Index, will be released by the BEA this morning. The PCE Index differs from the better-known Consumer Price Index because its composition is changed more frequently and it is thus quicker to reflect real-time pricing fluctuations. In the most recent report, through August, PCE inflation was reported at 2.2% year over year; by comparison, the latest CPI report, through September, had inflation at 2.4%. Core PCE, which removes volatile food and energy prices, rose at a rate of 2.7% in the latest month. Our PCE forecasts call for 2.1% for the headline number and for 2.6% for the core reading, as the measures make progress toward the Fed's 2% goal. Inflation in this cycle peaked in summer 2022 and has been on a fairly consistent downward trek since then. We track 20 inflation measures on a monthly basis. On average, they are indicating that prices are rising at a 1.9% rate year over year, down from 2.30% a month ago. The numbers are volatile and distorted by ultra-low readings within the producer price intermediate goods category, which may well be pointing to easing prices across the inflation spectrum in the months ahead. Focusing on core inflation, our reading is 2.6%, essentially level month over month. That's propped up a bit by sticky prices like shelter and transportation (the Sticky Price Core CPI Index reading is currently 4.0%). Looking down the road, investors are expecting that the Fed's series of rate hikes ultimately will tame inflation, with the three-year forward expectation rate at 2.16%.