Demand for utility stocks tends to go up as long-term interest rates go down because they are "inversely correlated" to interest rates, the CEO of New York energy provider Consolidated Edison told CNBC on Tuesday.
"That's a knife that cuts both ways," the chief explained. "We benefit as a sector as interest rates go down. We get hurt on the other end as interest rates come up."
The comments came the same day the Dow Jones Industrial Average tumbled more than 343 points on the first trading day of the fourth quarter. In the month of September, U.S. manufacturing had its lowest output in more than a decade. The Institute for Supply Management manufacturing index came in at 47.8%, the second month of contraction.
Shares of Consolidated Edison, widely known as Con Ed, are up more than 23% in 2019. McAvoy said the energy company has had 45 straight years of dividend increases, "the longest of any utility in the S&P 500," but stopped shy of predicting the future yield.
Con Ed is also focused on the transition to a clean energy economy, McAvoy said. The move to renewable energy will be of benefit to both customers and investors, he added. The company's clean energy business is investing in a number of areas to expand renewable and energy infrastructure projects.
"We worked to make sure that all of our investments are optimized to the value in customers and adopt things like solar panels, battery storage, electric vehicles and energy efficiency."