How the Dollar Index Affected the Material Sector
The Materials Select Sector SPDR ETF (XLB), which tracks the performance of the materials sector, showed an improved performance in July 2017. It rose nearly 1.5% during the month. Dow Chemical (DOW), Monsanto (MON), Praxair (PX), and Ecolab (ECL) returned 2.5%, -0.84%, -1.8%, and -0.81%, respectively, in July 2017.
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The Dollar Index plays an important role in the material sector. A stronger dollar (UUP) is bad for the material sector. A strong dollar hampers the exports of the material sector, while a weak dollar is a good sign for its exports. The Dollar Index fell nearly 3.4% in July 2017. The weak dollar helped the material sector to gain in July 2017.
On a year-to-date basis, the dollar has fallen nearly 9.5% as of August 2, 2017. The Materials Select Sector SPDR ETF (XLB) rose 9.4%, almost the same percentage, during this time period.
Material sector as compared to broader market
The broader market S&P 500 Index (SPY) rose nearly 2% in July 2017, and the material sector rose 1.5% in the same month. The Dow Jones Industrial Average (DIA) and the Nasdaq Composite (COMP-INDEX) returned nearly 2.5% and 3.6%, respectively, in July 2017.
In the next part of this series, we’ll analyze the performance of the industrial sector in July 2017.