Materials Sector Slips as Mining Drag Outweighs Chemical Gains

EasyAlpha grades each company against its industry peers, and only 36.4% of the exchange-traded fund Materials Select Sector SPDR Fund (XLB) sits in companies graded A or B. Fewer than four in ten sector members advanced on Friday, October 23, leaving gainers at 39.1% of the group. Smaller names held up better than the group's heavyweights. The cap-weighted Materials sector closed -0.9%, while an equal-weighted reading of the same stocks settled at -0.4%, weighed down by mining giant Newmont Goldcorp Corp finishing at -4.6%. Broader market sentiment also softened as rising oil prices pressured Wall Street and increased risk aversion across equities.

The drag from mining was the primary headwind. Bullion struggled as rate expectations pushed gold lower, hurting precious and industrial metals across global markets. The gold producer bore the heaviest losses despite reporting that it topped quarterly profit forecasts on stronger realized selling prices. Investors instead focused on operational headwinds, selling the stock after the company outlined higher capital spending and elevated cost guidance, which prompted an analyst downgrade.

Other corners of the materials space proved more resilient. Chemical and agricultural producers showed pockets of strength, led by The Mosaic Company at +3.2% and Dow Inc at +2.5%. Dow found traction after releasing a third-quarter financial report that delivered stronger sales, operating earnings, and cash flow.

As a vehicle for the sector, XLB closed at $51.29, bringing its daily move to -0.8%. While XLB offers low-cost access to $7.8 billion in sector assets at an expense ratio of 0.08%, low fees do not shield the portfolio from the fundamental drag across its holdings. Over a longer horizon, the fund carries a twelve-month return of -42.6%. Across the broader market, 3 of the 11 sectors rose, illustrating that while materials struggled, pressure was evident across most of the tape.