Mining stocks and sector-related exchange traded funds surged Monday ahead of Alcoa (NYSE: AA) earnings report and on strengthening precious metals.
The SPDR Metals & Mining ETF (NYSEArca: XME) jumped 3.9% Monday. XME increased 38.2% year-to-date.
The metals & mining sector advanced Monday as investors braced for the first quarter results with Alcoa unofficially kicking off the earnings season after the bell.
AA was up 4.0% Monday. Alcoa makes up 4.2% of XME’s underlying holdings.
Traders will be looking for evidence that Alcoa boosted sales from its downstream parts business to offset declining metals prices, reports Sonja Elmquist for Bloomberg.
“The key of what the valuation is really depends on the downstream,” David Lipschitz, analyst at CLSA Americas LLC, told Bloomberg. “So that’s the big question.”
Alcoa Chief Executive Officer Klaus Kleinfeld previously stated that he would split the copmany into those one that makes metal products from those that produce the metal itself. The two independent companies are scheduled to be formed in the second half.