Last week, Bank of America/Merrill Lynch upgraded United States Steel (NYSE: X) and Nucor (NYSE: NUE) to better-than-expected guidance. The steel industry is also strengthening from measures taken by the Commerce Department to reduce the supply of cheap Chinese steel imports, which have contributed to the lingering low prices. The commerce Department imposed a 266% tariff on Chinese cold-rlled steel imports and prices have rallied roughly 21% over teh past two months reports James Passeri for TheStreet.
Due to their close ties with the commodities market, materials stocks and ETFs are susceptible to cyclical demand and volatility in raw material and energy prices. While the sector’s sensitivity to business cycles can expose investors to greater risks, the area may also offer attractive returns during periods of strong growth.
Materials Select Sector SPDR