Mining Slump Holds Back Materials Fund Despite Positive Breadth

The Materials Select Sector SPDR Fund, an exchange-traded fund trading under ticker XLB, slipped -0.1% on Friday, August 28 to close at $53.18. That quiet surface concealed a clear divergence: 57.7% of the sector's S&P 500 members posted gains, yet heavy selling in mining shares pulled the cap-weighted Materials group down -0.3%, while the equal-weighted sector fell only -0.1%. The drag centered on Newmont Goldcorp Corp (-3.3%), which overshadowed positive sessions from agricultural and chemical producers such as Corteva Inc (+1.8%) and International Flavors & Fragrances Inc (+1.3%).

The retreat in precious metals miners came after economic policy remarks warned that inflation remained too high and financial conditions were not sufficiently restrictive. Those comments increased expectations for additional interest rate hikes, which pushed the dollar and Treasury yields higher while pulling down gold and silver prices. The decline in precious metals hit mining companies directly, whereas agricultural and specialty chemical companies proved more resilient during the session.

The session played out in a broader market where 5 of the 11 sectors rose. Despite the modest slip on Friday, August 28, XLB has risen +3.0% over the past month. Across its $8.3 billion in assets, the fund charges an expense ratio of 0.08%, providing an inexpensive way to track the sector when heavyweights and smaller constituents diverge.

Quality across the sector remains mixed. Every day EasyAlpha grades each company against its industry peers, placing each stock into a tier from A down to E. Across Materials, 45.1% of the fund's graded weight sits in companies graded A or B. Historically, companies graded A or B have maintained stronger fundamentals and carried a lower risk of large drawdowns than companies graded D or E, while the remainder of the fund sits in average or lower-tier ratings.