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Materials

The materials sector includes 15 separate sub-industries, from fertilizers and specialty chemicals, to steel and forest products, to precious metals and minerals.

This sector can be hyper-sensitive to the global economic outlook, but the sub-industries in the sector can react very differently to the same economic news.  For example, a slowdown in the world economy would certainly hurt steel production as countries ease back on infrastructure spending, but precious metals prices might perform quite well as central governments print more money to stimulate activity.  

We are currently underweighting this sector as Chinese growth slows, Europe remains stuck in a seemingly-eternal recession, and we are skeptical that gold prices can maintain their historic highs. 

In positive sign for global economy, materials are surging back
(22 Jun 2020) Of the eleven broad areas in the market, the most forgotten tends to be the materials sector. Granted, just 3.33% of all S&P 500 companies operate within the 15 industries of the sector, but that doesn't mean it shouldn't be represented in your portfolio. The pandemic decimated the performance of most materials firms as demand dried up, and they weren't doing all that well before the incident hit. Suddenly, however, the group is surging back—and that may spell good news for the global economy. Since mid-March, the Materials Select Sector SPDR (XLB $56) has risen 48% (it hit a 52-week low of $37.69 on 16 Mar). Oil and copper are the two most obvious drivers of the rally, and those two areas tend to move in direct correlation to economic activity—as opposed to gold miners, for instance. So, what are some of the top component companies in the materials sector? Air Products & Chemicals (APD, chemicals), Sherwin-Williams (SHW, specialty chemicals), Vulcan Materials (VMC, building materials), and FMC Corp (FMC, agricultural inputs) are all top holdings. In addition to XLB, investors may want to consider the Fidelity MSCI Materials ETF (FMAT $30), or the VanEck Vectors Rare Earth/Strategic Metals ETF (REMX $35).
Content copyright 2022, Penn Wealth Publishing, LLC.  All rights reserved.

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Any opinions expressed are those of Penn Wealth Publishing, LLC and are current only through the date posted.  We reserve our First Amendment right to use parody, sarcasm, satire, and irreverent humor to analyze the current state of business, finance, domestic issues, and global affairs; and to speak freely, outside the zeitgeist of political correctness.  These views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.  Past performance is no guarantee of future results.  Always consult your investment professional before investing any money. All attempts to ensure accuracy in the data provided have been made, but always verify at the source before investing. This site is for informational purposes only; Penn Wealth Publishing, LLC is not responsible for any losses incurred. 

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  • Home
  • News Headlines
  • The Penn Portfolios
  • Contact
  • Blog
  • Financial Terms & Concepts
  • Art & Collectibles
  • Cash & Fixed Income
  • Commodities
    • Coffee & Cocoa Beans
    • Grains
    • Sugar
  • Communications Services
    • Interactive Media & Services
    • Media & Entertainment
    • Telecommunication Services
  • Consumer Staples
    • Beverages, Tobacco, & Cannabis
    • Drug Retail
    • Food & Staples Retailing
    • Food Products
    • Household & Personal Products
  • Consumer Discretionary
    • Automotive
    • Consumer Electronics
    • Education & Training Services
    • Homes and Durables
    • Hotels, Resorts, & Cruise Lines
    • Leisure Equipment, Products, & Facilities
    • Restaurants
    • Multiline Retail
    • Specialty Retail >
      • E-Commerce
    • Textiles, Apparel, & Luxury Goods
  • Currencies & Forex
    • Cryptocurrencies
  • Economics
    • Economic Outlook
    • Demographics & Lifestyle
    • Education & Training
    • Goods & Services
    • Happiness Index
    • Housing
    • Supply, Demand, & Prices
    • Work & Pay
  • Energy
    • Energy Commodities
    • Energy Equipment & Services
    • Exploration & Production
    • Integrated Oil & Gas
    • Oil/Gas Refining, Storage/Transport
  • Financials
    • Capital Markets
    • Commercial Banks
    • Consumer Finance
    • Fintech
    • Insurance
  • Fixed Income Desk
    • Bank Loans
    • Corporate Bonds
    • Municipal Bonds
    • Sovereign Debt & Global Fixed Income
  • Global Strategy
    • Trade
    • Africa
    • Australasia
    • East & SE Asia
    • Europe >
      • Russia
    • Global GDP & Debt
    • Global Health Threats
    • Global Organizations & Accords
    • Latin America
    • Middle East
    • South Asia
    • War on Terrorism
  • Government Report
    • National Debt & Deficit
    • Fiscal Policy
    • Government Watchdog
    • Judicial Watch
    • Media Malpractice
    • Monetary Policy
    • National Security
    • Trade Policy
  • Health Care
    • Biotechnology
    • Health Care Facilities
    • Health Care Providers & Services
    • Life Sciences Tools & Services
    • Medical Devices Equip & Supplies
    • Pharmaceuticals
  • Industrials
    • Aerospace & Defense
    • Airlines & Air Freight
    • Business & Professional Services
    • Construction & Engineering
    • Industrial Conglomerates
    • Robotics & Industrial Machinery
    • Maritime
    • Road & Rail
    • Trading Companies and Distributors
    • Transportation Infrastructure
  • Information Technology
    • Application & Systems Software
    • Technology Hardware & Equipment
    • Cybersecurity
    • Electronics Equipment & Components
    • IT Software & Services
    • Semiconductors & Equipment
  • Materials
    • Chemicals
    • Construction Materials
    • Metals & Mining
  • Real Estate
    • Management & Development
    • REITs >
      • Hotel & Resort REITs
      • Retail REITs
      • Specialty REITs
  • Utilities
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  • Wall Street
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    • Global Exchanges & Indexes
    • Market Pulse
    • Market Risk Management >
      • Market Downturns Cause & Effect
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