S&P 500 Materials Sector SPDR (XLB Quick QuoteXLB - Free Report) is probably on the radar for investors seeking momentum. The fund just hit a 52-week high and moved up 22.08% from its 52-week low price of $74.33/share.

Are more gains in store for this ETF? Let us take a quick look at the fund and the near-term outlook on it to get a better idea of where it might be headed.

XLB in Focus

The underlying Materials Select Sector Index seeks to provide an effective representation of the materials sector of the S&P 500 Index. The fund has major exposure to chemicals (67.61%), followed by metals and mining (15.85%). The product charges 9 bps in annual fees (see: all Materials ETFs).

Why the Move?

The materials sector has been an area to watch lately, given rising market expectations of the Fed starting to cut interest rates from June. Being sensitive to the market’s cyclicality and capital-intensive nature, the sector tends to benefit from lowered borrowing costs. The weakening of the greenback due to the Fed’s dovish stance also bodes well for the sector, making the fund an attractive investment option.

More Gains Ahead?

Currently, XLB has a Zacks ETF Rank #2 (Medium) and a Medium risk outlook. However, it might continue its strong performance in the near term, with a positive weighted alpha of 21.40, which gives cues of a further rally.