Of the 12 Dow stocks that are down year-to-date, three are XLI holdings. That trio is comprised of Caterpillar (NYSE: CAT), 3M (NYSE: MMM) and United Technologies (NYSE: UTX). Those stocks combine for 12.3% of XLI’s weight. So precipitous has been Caterpillar’s slide that it is no longer a top 10 holding in XLI.
“The shale oil & gas revolution is contributing to a manufacturing renaissance that has resulted in steadily rising margins and thus faster EPS growth. However, revenue growth will be hard to come by this year due to the strong USD, and the soft economy is evident in the recent negative revisions. However, the sector’s P/E multiple has held steady over the last year or so even as the market’s P/E has risen, boosting Industrials’ attractiveness to about average,” said AltaVista Research in the note.
Industrial Select Sector SPDR
