This does boba balls have caffeinearticle was originally published on

ETFTrends.com.

The industrial sector, the sixth-largest sector weight in the S&P 500, languished last year. The

Industrial Select Sector SPDR ETF (

XLI

)

, the largest exchange traded fund dedicated to the sector, finished 2018 with a loss of 14.88%, more than twice as bad as the S&P 500's loss for the year.

The allure of late-cycle sectors, including industrials, in a rising rate environment remains in place. Industrials perform well when interest rates rise because rising rates can go hand-in-hand with economic growth. Increased infrastructure spending is also seen as a catalyst for industrial stocks and ETFs.

In 2018, however, the industrial sector and other cyclical groups, betrayed late cycle reputations. Industrials, in particular, were hampered by trade tariffs and some laggard performances by some of the sector's marquee names. Still, some investors nibbled at XLI ahead of the new year.

“The $10 billion

Industrial Select Sector SPDR Fund

, ticker XLI, took in $708 million last week, the most since January. Shares of the ETF have also gained,

rising

more than 5.5 percent since Dec. 24,”

reports Bloomberg

.

Searching For Upside

When the industrial sector performed well in 2017, much of that upside was attributable to aerospace and defense names. Potential catalysts for aerospace ETFs include include, renewed airline pricing power evidenced by higher ticket prices, and more fees paid per traveler, increased airline profitability, new aircraft program launches and continued demand for aircraft models and technology.

While U.S. equity markets slumped last year, the good news for the cyclical industrial sector and ETFs like XLI is that market observers believe there is only a small chance that the U.S. economy sees a recession in 2019.

“Investors are looking for signs that the U.S. economy remains strong. It expanded by 3.5 percent in the third quarter and is expected to grow next year, albeit at a slower pace,” reports Bloomberg. “Some retailers are posting record holiday sales, and

consumption

-- which accounts for around 70 percent of the economy -- rose more than forecast in November. A Federal Reserve Bank of New York

gauge

puts chances of a recession a year from now at around 16 percent, with some investors calling fears of a slowdown 'overblown.'”

The inflows to XLI in late December trimmed the ETF's 2018 outflow tally to $781.18 million.

For more market trends, visit

ETF Trends

.

POPULAR ARTICLES AND RESOURCES FROM ETFTRENDS.COM

SPY ETF Quote

VOO ETF Quote

QQQ ETF Quote

VTI ETF Quote

JNUG ETF Quote

Top 34 Gold ETFs

Top 34 Oil ETFs

Top 57 Financials ETFs

Story continues

Markets Close Out 2018 in the Green as Dow Gains Over 250 Points

Natural Gas ETFs Gap Lower on Milder Week-End Temperatures

Opportunities Abound in 2019 Following a Stormy 2018

Five Questions: Behavior in Investing With Dr. Daniel Crosby

ETF Investors Sift Through the Wreckage for 2019 Plays

READ MORE AT ETFTRENDS.COM >

View comments

(责任编辑：Exploration)