By Kate Gibson
Recent strength in commodity prices and weakness in the U.S.
dollar were among the factors Monday that had U.S. stock market
investors fleeing to the materials sector, which also benefited
from brighter forecasts for global economic growth.
Improving expectations for global economic growth is "a strong
positive for a sector that relies heavily on export growth,"
Oppenheimer equity analysts Brian Belski and Nicholas Roccanova
wrote in a research note.
On Monday, material shares fronted gains, with Dow Chemical Co.
(DOW) rising 6.4%, while packaging products maker Sealed Air Corp.
(SEE) and lumber giant Weyerhaeuser Co. (WY) were among the
session's top performers, both up more than 5%.
Reversing course in afternoon trade, the major indexes erased
earlier declines to cross into positive territory. The Dow Jones
Industrial Average (DJI) was recently up 11.19 points, or 0.1%, to
9,616.6. The S&P 500 Index (SPX) climbed 4.71 points, or 0.5%,
to 1,047.44, while the Nasdaq Composite (RIXF) gained 6.22 points,
or 0.3%, to 2,087.12.
Year-to-date, materials are up 34.1%, outperforming the broader
market, which had the S&P 500 ahead 15.4% as of Friday's
close.
"Once again, the market is beginning to rotate investment
groups, from the financials to the materials. Materials and the
technology sectors have been among the top groups since late second
quarter and continue to do so today, again as investors expect real
and lasting economic recovery," said Paul Nolte, director of
investments, Hinsdale Associates.
Crude-oil futures in recent months have traded between $65 and
$75 a barrel as the market looked to increase demand on
expectations of a global recovery. On Monday, oil futures lapsed
below $70 a barrel, while shares of natural gas jumped 8%. .
"We believe the correction in the local Chinese equity market is
an early sign of pending correction in commodities along with
materials," wrote Bank of America Merrill Lynch research analysts
Mary Ann Bartels and Stephen Suttmeier.
Gold mining company Goldcorp. (GG) made Bank of America's latest
"Most Attractive Buy" list, which identifies common stocks viewed
as attractive on technical analysis.