XLI: S&P500 Industrial ETF rises in 2023, GE, RTX, LUV among top movers for the year

Industrial Select Sector SPDR Fund ETF (NYSEARCA:XLI), which tracks the S&P 500 Industrial sector, rose about 15.96% in 2023 after registering a 7% drop in the previous year.

Meanwhile, the Industrial sector (SP500-20) gained 15.74%, underperforming the broader S&P 500, that rose about 25% in 2023.

On a comparative basis, the Industrial sector fared better than some of its peers like Energy, Materials, Consumer Discretionary, and Financial sectors, while lagging behind the Technology sector which rose over 50%.

Within industrials, the Commercial and professional Services sub-sector grew 18.04%, the Capital Goods sub-sector came second, rising 17.01%, while the Transportation sub-sector gained about 9.17%.

Industrials saw regular weekly U.S. stock fund inflows and outflows, with the week from Aug 7 seeing the highest inflows of $744.53M, while the next week saw the highest outflows of $836.87M. By the end of 2023, the sector had net inflows of about $101.81M.

Top sector movers in 2023

Gainers: Builders FirstSource (BLDR) +157.31%

General Electric (GE) +95.20%

TransDigm Group (TDG) +66.57%

Pentair (PNR) +61.65%

United Rentals (URI) +61.34%

Losers: RTX (RTX) -15.56%

Southwest Airlines (LUV) -14.23%

Northrop Grumman (NOC) -14.20%

Johnson Controls International (JCI) -9.94%

United Parcel Service (UPS) -9.55%

Outlook for 2024

Wells Fargo favored investing in health care (XLV), industrials (XLI), and materials (XLB) sectors, noting that, “These high-quality sectors have not kept pace with the index in this narrow equity rally but in our view offer attractive relative performance potential between now and the end of next year.”

Additionally, CFRA Research saw big opportunities in the financial and industrial sectors, which have had an improvement in their technical underpinning”.

Meanwhile, UBS preferred tech, consumer staples, and energy for 2024, and it remained Neutral on industrials, healthcare, and financials, among others.

Endorsing the Industrial Select Sector SPDR Fund ETF as a Buy, SA Analyst Daniel Jones said, “The ETF isn’t exactly cheap, but current economic conditions suggest it could warrant further upside in the long run.”

What Quantitative Measures Say

Seeking Alpha’s Quant Ratings recommended the ETF as a Buy, rating it 3.94 out of 5. The ETF was graded an A on dividends, an improvement from a B+ over the past six months. Its momentum and liquidity prospectus were graded an A- and an A+, respectively.