The Materials Select Sector SPDR (NYSEArca: XLB) has not shown the same third-quarter sensitivity to the strong dollar as XLE and that has helped the materials ETF keep its head above water with a 0.3% gain. Hickey told CNBC his preferred materials pick is Dow Chemical (NYSE: DOW).
Dow, like rival DuPont (NYSE: DD), has drawn the interest of an activist investor looking to break the company into two units to unlock shareholder value. DuPont and Dow combine 20.4% of XLB’s weight. [Peltz Pushes for DuPont Breakup]
The Industrial Select Sector SPDR (NYSEArca: XLI) has been crimped a bit by the stronger greenback, falling 3% this quarter. Industrials’ inverse relationship with the U.S. dollar has previously been on display. From July 2013 through the end of last year, UUP fell almost 5% but XLI gained 22%. Like, XLE and XLB, XLI outperformed the S&P 500 during the 2004-2006 Fed tightening cycle.
Energy Select Sector SPDR
