Materials Fall as Mining Stocks Slide on Lower Gold Prices

On Monday, September 28, the Materials Select Sector SPDR Fund, an exchange-traded fund tracking the sector under the ticker XLB, finished -0.7% as weakness concentrated in precious metals weighed on the group. Breadth across the sector was negative, with 42.3% of its companies posting gains on the day, while only 39.0% of the fund's graded weight sits in our top quality grades of A or B. The retreat was led by Newmont Goldcorp Corp, which finished -4.4% as gold prices dropped to a seven-week low amid a stronger dollar and rising Treasury yields.

Macroeconomic factors drove much of the pressure across commodity markets. Renewed inflation concerns and expectations of higher interest rates took hold as a rebound in crude oil prices pressured market sentiment. Precious metal miners bore the brunt of that shift, with gold falling below $4,200 an ounce and pulling down mining equities.

The cap-weighted Materials sector closed -0.7%, matching an equal-weighted return of -0.7% across the group. That alignment shows that selling pressure was distributed across large producers and smaller industry peers alike, rather than concentrated in a handful of mega-cap constituents. Across the broader market, 3 of the 11 sectors rose. Pockets of strength emerged in specialty materials and construction suppliers, where Martin Marietta Materials Inc closed +1.3% and Sherwin-Williams Co ended +1.1%, though neither gain was sufficient to offset the losses across mining. Elsewhere in the sector, an employee died following a workplace accident at a Cleveland-Cliffs plant in Monessen.

Monday's decline continues a difficult stretch for materials equities over recent months. Over the past month, XLB has moved -7.1%, and the fund stands at -5.6% over the past 100 sessions and -44.3% over the past twelve months, despite posting +0.8% over the past six months.