- Markets Data
- U.S. & World Indexes
- U.S. Market Movers
- Market News & Analysis
- Equity
- Interest Rates
- Foreign Exchange
- Energy
- Metals
- Agriculture
- Sectors & Industries
- Sectors
- Industries
- Weighting Recommendations
- Education
- Market & Sector Education
News and Research Alerts sent to the device and timing of your choice.
Learn more on top-down research at our Trading Knowledge Center
Industrials
| The Industrials Sector includes companies whose businesses are dominated by one of the following activities: The manufacture and distribution of capital goods, including aerospace & defense, construction, engineering & building products, electrical equipment and industrial machinery. The provision of commercial services and supplies, including printing, employment, environmental and office services. The provision of transportation services, including airlines, couriers, marine, road & rail and transportation infrastructure. |
*
Actual market weightings for each sector are based on the S&P 1500.
**The Market Analysis, Research and Education (MARE) group is a unit of Fidelity Management & Research LLC.
PDFs require Adobe® Reader® and will open in a new window.
Sector Commentary from Standard & Poor's
11/15/2009
S&P recommends overweighting the S&P 500 Industrials sector. Year to date through October 23, the S&P Industrials Index, which represented 10.2% of the S&P 500 Index, rose 12.6%, compared to a 19.5% increase for the S&P 500. In 2008, this sector index declined 41.5%, versus a 38.5% decrease for the 500. There are 18 sub-industry indices in this sector, with Aerospace & Defense being the largest at 26.6% of the sector's market value.
S&P analysts have a positive fundamental outlook on the Industrials sector due to expected benefits from an improving global economic picture as well as a yet-to-be-felt favorable impact anticipated from the infrastructure spending package. Also, the group is increasingly global in scope. In 2008, the S&P 500 Industrials sector derived roughly 46.1% of its sales internationally. As a result, we expect continued U.S. dollar weakness to boost this global sector's EPS outlook in the second half of the year. The sector's EPS are expected to rise 8% in 2010, according to S&P. The sector trades at 15.4X projected 2010 EPS, versus 14.6X for the broader market. Its P/E to projected five-year EPS growth rate of 1.5X is in line with the broader market's 1.5X. The sector's marketweighted S&P STARS average of 3.5 (out of 5.0) is below the average of 3.7 for the S&P 500.
The S&P Industrials Index remains in a strong uptrend with very little overhead supply above current prices. We recently saw a long-term bullish moving average crossover, as the 17-week exponential average passed above the 43-week average. Since the cross, the shorter average has bullishly risen away from the longer-term average. Because of the chart pattern, and the precipitous decline that occurred during September and October 2008, there is very little chart resistance until the 290/300 zone. The 14-week RSI continues to trace out recovery highs and the weekly momentum trend remains bullish, in our view. Relative strength versus the S&P 500 has broken out of a triangle pattern and has marched to new recovery highs. We are bullish on Industrials from a technical perspective.
We recommend overweighting this sector, as we think the global economy will be stronger next year than in 2009, and that this will be reflected in this cyclical sector's profitability. Also, from a valuation standpoint, we believe the sector offers better value than other economically sensitive areas.