The materials sector, which holds stocks such as Sherwin-Williams (SHW) and Linde, just posted its best win streak, outpacing all other sectors in the S&P 500.
The sector ended last week up nearly 3% in the top performance on the benchmark index, scoring gains for nine straight daysーits best win streak since last year.
Progress with the infrastructure bill in Congress certainly boosted the materials sector, according to Steve Chiavarone, portfolio manager at Federated Hermes. He also believes the materials sector is more easily able to increase prices given its position at the beginning of the supply chain.
In the weeks ahead, close to half of the XLB industrials ETF will report their earnings. The sector, according to S&P Global estimates, is expected to post 114% earnings growth in its second quarter.
Also Read: S&P 500 Notches Sixth Straight Positive Month as Amazon Shares Plummet
More upside for materials
The charts are also supporting more upside for materials with the sector already in its 50-day moving average at the $83 level. If the sector closes back above this level, that figure could rise to $89. For one thing, steel stocks are also making new highs inside the XLB, especially aluminum companies.
With the XLB ETF closing Friday slightly above $84, a move to $89 would imply a 6% upside. What’s more, the dollar and the XLB are going in opposite directions. Over the past month, the U.S. dollar has fallen slightly while the XLB ETF has risen 2%. If the dollar continues to weaken in the weeks ahead, the XLB could grow stronger.
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