Optimism for the Industrials Sector Could Benefit This ETF

Optimism in the industrials sector could provide opportunities in exchange-traded funds (ETFs). However, faith in the sector isn’t absolute by some market experts, opting to exercise due diligence especially given the current macroeconomic environment.

“Cautious optimism is where we’re at today,” said Goldman Sachs analyst Joe Ritchie in a Yahoo Finance report that explained how industrial stocks could benefit from new U.S. President Donald Trump. “Several companies are expecting better growth in 2025 … It’s only a matter of time before it happens. It’ll inflect at some point in 2025.”

An ongoing obstacle of course is persistent inflation, which could give the Fed pause when it comes to rate cuts. Some economists are forecasting inflation could even go higher following the inauguration of Trump. He said he will take on the tremendous task of tamping down high consumer prices.

The Return of Tariffs?

The new president already plans to implement executive actions that will cut energy prices as well as get inflation under control. Tariffs, a mainstay during Trump’s presidency in 2016 to 2020, could also make a return. But the returning president said they won’t happen soon.

“The inflation crisis was caused by massive overspending,” Trump said in his inaugural address.

Furthermore, with a new president in place, there could be some continued optimism for the industrial sector if policies are in place that complement a stronger-than-expected economy. Of course, the Fed’s policy on interest rates will continue to weigh in heavily, especially if they’re trying to guide the economy to a soft landing to continue rate cuts.

“We believe the resiliency of the U.S. labor market, stickiness in inflation and uncertainty emanating from federal economic policy will keep the FOMC on hold for the next several months,” said Wells Fargo economists.

The S&P 500 Industrials index is up over 20% within the past year. It benefited from a year-end market rally before receding in January.

^SPXINS Chart

^SPXINS data by YCharts

Add 3x Exposure to Industrials

Given the performance of the aforementioned index, if the industrials sector can continue on its current trajectory, traders should look at the Direxion Daily Industrials Bull 3X Shares (DUSL).

DUSL adds 300% exposure to the performance of the Industrials Select Sector Index. The index is well-diversified, adding companies from a variety of business sectors. Those include aerospace and defense; industrial conglomerates; marine; transportation infrastructure; machinery; road and rail; air freight and logistics; commercial services and supplies; professional services; electrical equipment; construction and engineering; trading companies and distributors; airlines; and building products.

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