Basic Materials Sector Holding Up As Market Indices Take A Bruising | ETF Trends

As the U.S. stock market indices retrace back and make fresh lows on the day again after attempting several defeated rallies, amidst heightening volatility, there is one sector which is holding up relatively well despite the overall beating: materials.

While the Dow slumped below 25,000 points to a four-month low on Friday, the Dow and S&P 500 each lost nearly 7% in May, their first losing months since December, and the Nasdaq tumbled 8% on the month, its worst performance since May 2010, the materials sector is amazingly still making gains today, with Exxon Mobil Corp (XOM) and Chevron Corp (CVX) up 1.13% and 1.55% respectively.

The basic materials sector is a category of equities that represent companies involved in the discovery, development, and processing of raw materials. The sector includes companies engaged in mining and metal refining, chemical products, and forestry products.

Companies in this sector supply most of the materials used in construction and development. As a result, they are sensitive to changes in the business cycle and tend to thrive when the economy is strong.

Three of the biggest American companies are included in the basic materials sector, and all three are involved in the oil business. These are Exxon Mobil, Chevron, and the oil field services company Schlumberger Ltd.

Exxon has multi-billion-dollar expansion programs to find and produce new reserves of oil and natural gas, as well as to expand its refining and chemical footprint. It has projected shale production of 1 million barrels per day in the Permian Basin, the top U.S. shale field, as early as 2024.

DuPont and Monsanto, chemicals companies, are also listed in this sector, as well as two big producers of construction materials: Vulcan Materials, a producer of crushed stone, gravel, and concrete, and Steel Dynamics, a maker of finished steel products.
DuPont de Nemours, Inc. (“DuPont”), the premier innovation provider of value-added specialized solutions that transform industries and everyday life, today announced its debut as an independent company following the successful separation of its Agriculture Division through the spin-off of Corteva, Inc. (“Corteva”). The company was formerly known as DowDuPont Inc. DuPont common stock begins regular way trading today on the New York Stock Exchange (NYSE) under the ticker symbol “DD.”
“The new DuPont launches today with leading market positions in four core markets and strong geographic, customer and end-market diversification,” said Ed Breen, Executive Chairman of DuPont. “The company expects to drive above GDP growth through disciplined innovation, a relentless focus on ROIC, and a best-in-class cost structure. With these priorities, combined with active portfolio management and a commitment to capital returns, DuPont will remain intently focused on delivering value for our shareholders.”
Investors interested in participating in the overall materials sector might consider the Materials Select Sector SPDR Fund (XLB), which is up nearly 2.5% on the day.
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