The market continues to perform well, with the SPDR S&P 500 ETF Trust (NYSE: SPY) up 12.35% year-to-date. While the tech sector has been leading the rally, other sectors like industrials have also contributed. The Industrial Select Sector SPDR Fund (NYSE: XLI) has seen a slight lag behind the broader market, up 7.32% year-to-date.
The XLI ETF has been consolidating in a tight range over the past week, with its 20 and 50-day Simple Moving Averages acting as resistance. A breakout above these levels could indicate a bullish consolidation on the verge of a significant breakout, signaling a potential strong upward move for the sector.
The Industrial Select Sector SPDR Fund aims to match the Industrial Select Sector Index, with a focus on industries like aerospace, defense, industrial conglomerates, and machinery. The fund has top holdings in companies like Caterpillar, Union Pacific, General Electric, Boeing, and United Parcel Service. Despite some changes in the top three holdings this year, the ETF’s overall holdings have an aggregate rating of Hold, with a consensus price target forecasting a 7% upside for the XLI.
Three top performers within the industrial sector include General Electric (NYSE: GE), Raytheon Technologies (NYSE: RTX), and Eaton (NYSE: ETN). GE has surged 59% year-to-date and now holds the top spot in the XLI holdings. RTX has also shown significant strength, up 28.49% YTD, while Eaton has gained 30.73% YTD but recently pulled back from its 52-week high.
As the sector consolidates, it will be important for these leaders to reclaim support levels and turn short-term resistance into support. This shift could indicate a new upward momentum phase for industrial stocks. Investors should watch for key moving averages and breakouts above resistance levels to determine the sector’s future performance.