Could Trade Tensions Continue to Affect the Industrial Sector?



The industrial sector in May

Previously in this series, we saw that the broader-market S&P 500 (SPY) and its major sectors improved in May. However, various changes in Donald Trump’s trade rules, North Korea talks, and trade negotiations affected markets.

The Industrial Select Sector SPDR ETF (XLI) rose 3% in May. Major XLI holdings General Electric (GE), Boeing (BA), 3M (MMM), and Honeywell International (HON) rose 0%, 6.1%, 2.1%, and 2.7%, respectively, in May, boosted by earnings growth.

Factors affecting the industrial sector

Announcements about imposing Chinese import tariffs affected major industrial stocks in May, despite trade war concerns subsiding after two rounds of US-China trade negotiations. Caterpillar (CAT), 3M (MMM), and Boeing expect sales to fall if trade war tensions persist. In the next part of this series, we’ll analyze the volatility index in May.

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