The Materials Select Sector SPDR Fund ETF (NYSERCA:XLB), which tracks the S&P 500 materials sector, lost 4.7% in the second quarter of 2024, underperforming the broader S&P 500 index, which rose 4.1% over the same period. The materials sector increased almost 9% in the first quarter.
Newmont (NEM) posted the biggest gain in the S&P 500 materials index, up around 17% in the April-June quarter. The miner recently received a rating upgrade from UBS to “Buy” with a $50 price target as the brokerage remains constructive on gold prices, which is expected to drive consensus earnings upward revisions.
Meanwhile, Albemarle (ALB) saw the group’s biggest drop over the past three months, falling around 27% due to a less-than-bright outlook for lithium prices amid a supply glut and as higher interest rates impact demand for electric vehicles.
However, while the SPDR Materials-Focused ETF (XLB) managed to gain just 3.3% through 2024 versus the Broad-Based Index ETF (SPY), nearly 80% of the sector ETF’s tickers managed to peak in value over the past year. From the end of 2023 through June 20, 22 of the 28 stocks in the S&P 500 Materials sector hit 52-week highs, while 5 stocks hit 52-week lows over the nearly 6-month period.
Among industries, packaging (SP500-151030) fell 1.3%, building materials (SP500-151020) fell the most, dropping more than 9%, chemicals (SP500-151010) lost about 5%, while metals and mining (SP500-151040) lost 2.9% in the second quarter.
Main movements in the second quarter
Winners
- New Monton (NEM) +16.8%
- International Flavors and Fragrances (IFF) +10.7%
- Air and Chemical Products (APD) +6.5%
- DuPont de Nemours (DD) +5%
- Freeport-McMoRan (FCX) +3.5%
Losers
- Albemarle (ALB) -27.5%
- Celanese (CE) -21.5%
- Nucor (NUE) -20.1%
- The Sherwin-Williams Company (SHW) -14.1%
- PPG Industries (PPG) -13.1%
What Wall Street analysts expect
Wells Fargo Investment Institute expects companies in the industrial and materials sectors to contribute to building AI-related infrastructure, adding that the generative push of AI will positively support these sectors even in an economy based on faster growth. slow. Regarding the materials sector, industrial groups such as construction materials, copper and steel should also benefit from the boost of artificial intelligence.
Meanwhile, Oppenheimer Asset Management highlighted the consumer discretionary, energy, materials and information technology sectors, and indicated that it believes further market upside is possible as major market averages approach all-time highs.
What quantitative measures say
XLB receives a Hold rating from the Seeking Alpha quantitative system with a score of 2.73. This is largely due to a D grade in the risk category and a C+ for momentum. However, the stock earns a B+ for dividends, an A+ for liquidity, and an A for expenses.