For investors looking for momentum, The Materials Select Sector SPDR Fund (XLB Quick QuoteXLB - Free Report) is probably a suitable pick. The fund just hit a 52-week high and is up 103.9% from its 52-week low price of $37.69/share.

Let’s take a look at the fund and its near-term outlook to gain an insight into where it might be headed:

XLB in Focus

The fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Materials Select Sector Index. It has AUM of $5.07 billion and charges expense ratio of 13 basis points, as stated in the prospectus.

Why the Move?

The materials sector, which is the most sensitive to global economic growth expectations, is gaining from a dovish Fed. Lower rates build pressure on the U.S. dollar that makes dollar-denominated materials cheap for foreign investors, raising demand for products that these companies sell. Also, as the sector is highly dependent on interest rates for capital expenditures, lower rates are a boon. The coronavirus vaccine rollout, introduction of the much-awaited fresh round of stimulus and the Fed’s continuous support to keep interest rates low have added to investors’ hope of faster economic recovery in the United States. This is making funds like XLB an attractive investment option.

More Gains Ahead?

It seems like the fund will remain strong, with a positive weighted alpha of 39.75, which gives cues of further rally.

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