XLB · Materials

Thesis: The materials sector appears to be entering a mid-cycle expansion phase supported by a recovery in manufacturing and residential construction. Recent data from March 2026 shows a 1.5 percent increase in manufacturing new orders and a significant 10.8 percent rise in housing starts, which is consistent with growing demand for steel, aggregates, and paints. While industrial gas leaders like Linde maintain stable pricing power and project backlogs, the broader sector faces mixed signals from a fragile expansion in China and recent margin compression for gold miners due to higher input costs. Commodity chemicals also remain pressured by global oversupply, though the overall trend in US industrial and infrastructure spending remains a positive driver for heavy materials and specialty coatings. Despite some visibility gaps caused by rescheduled government construction reports, the weight of recent earnings and manufacturing data suggests a healthy cyclical rebound. The sector's near-term thesis health is constructive.

SPY weight, tilt, and Vega weights