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Industrial Select Sector SPDR Fund ETF (NYSEARCA:XLI), which tracks the S&P Industrial sector, fell about 2.64% in the second quarter of 2024, compared to an 11.63% rise in the first quarter of the year.
The industrial sector (SP500-20), which has an 8.5% weightage on the S&P 500, fell another 2.61%, underperforming the broader index, which rose about 4.46% during the April to June period.
On a comparative basis, the industrial sector fared better than some of its peers like energy, materials, and consumer staples, while lagging behind the technology and financial sectors.
Recently, Wells Fargo Investment Institute said it expected companies in the industrial and materials sectors to contribute to artificial intelligence (AI) related infrastructure build-out.
One of the key reasons behind the choice of industrials and materials for WFII is the fact that the U.S. government and various private sector entities across the world are proposing large-scale AI-related expenditures to upgrade and improve infrastructure over the coming years, said the institute.
Industrials saw regular U.S. stock fund inflows and outflows, with May 31st seeing the highest inflows since 2024 at $585.72M. By June 27th, the sector had net flows of about $618.13M.
Top five movers in Q2 (As of June 28th)
- Gainers: C.H. Robinson Worldwide (CHRW) +18.04%
- 3M Company (MMM) +17.98%
- Howmet Aerospace (HWM) +16.92%
- Verisk Analytics (VRSK) +15.78%
- GE Aerospace (GE) +11.73%
- Losers: Builders FirstSource (BLDR) -34.25%
- American Airlines (AAL) -26.27%
- Pool Corporation (POOL) -25.82%
- J.B. Hunt Transport Services (JBHT) -19.51%
- IDEX Corporation (IEX) -18.34%
What Analysts Expect
SA Analyst MacroGirl said, “XLI has made a striking divergence from SPY, and this provides some insight to the underlying dynamics of the stock market. Cooling in the economy is pushing yields lower, and this is a much better environment for XLK than it is for XLI.”
What Quantitative Measures Say
Seeking Alpha’s Quant Ratings recommended the ETF as a Buy, rating it 3.50 out of 5. The ETF was graded an A- on dividends, compared to an A six months ago. Its momentum and liquidity prospects were graded an B and an A+, respectively.
