Investors have spent a lot of time watching the AI boom. But several S&P 500 sectors are now beating the market. These sectors do not move in step with technology, so they can give a fresh view of the economy.
A viewer asked which is a better gauge of the U.S. economy – the Materials sector (XLB) or the Industrials sector (XLI). The answer depends on where the market is in its cycle.
In the early part of a bull market, growth groups like Technology and Consumer Discretionary tend to lead. As the rally ages, “late‑cycle” groups – Materials, Industrials, and Energy – usually take over. This pattern is not a rule, but many healthy bull markets show a clear change in leadership.
Seeing this shift helps traders confirm that a broad market move is sustainable. With semiconductor leaders now in a pull‑back, investors are watching whether the late‑cycle groups are stepping forward.
Below are three stocks that illustrate this trend. Each one has shown strong technical performance as we entered August.
Nucor Corp. (NUE)
Steel maker Nucor has been rising since mid‑2025. A long‑term uptrend has helped the stock beat the S&P 500.
The Performance Spread tool shows how NUE’s price moved away from the SPY index over the last 18 months. The Relative Strength Index is a bit high, but similar levels in late 2025 preceded further gains. With the price back above key moving averages, the uptrend looks healthy.
Howmet Aerospace Inc. (HWM)
Howmet has formed higher highs and higher lows since April 2025. The steady climb has kept the stock ahead of the broader market.
Even when short‑term pullbacks happen, the price stays above important moving averages. The performance line also makes higher lows, confirming strength.
Phillips 66 (PSX)
Energy stocks often swing with oil prices. Phillips 66, a downstream company, is less affected by crude moves and has shown steady growth.
The stock is above rising 50‑day and 200‑day moving averages. As long as it continues to post higher lows, the uptrend remains strong.
Smart investors watch sector‑rotation themes to match the market’s cycle. By focusing on late‑cycle leaders that are gaining strength, you can be ready for the next shift.
Disclaimer: This material is for educational purposes only and does not constitute financial advice. Always consider your personal situation and consult a professional before making investment decisions.
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