Industrial ETF Surges 2.86% as Investors Shun AI Stocks
State Street Industrial Select Sector ETF rallied 2.86% as software and AI-exposed stocks slid, reflecting a decisive shift toward cyclical, asset-heavy industries. Goldman Sachs strategist Ben Snider notes investors favor sectors with the weakest correlation to AI-driven software, including construction machinery and oil & gas drilling.
1. XLI Posts Significant Rally
On February 7, State Street Industrial Select Sector ETF (XLI) climbed 2.86% as investors rotated capital away from high-multiple software names. The move marks one of XLI’s strongest one-day gains since the start of the year and follows a broader sell-off in AI-exposed equities.
2. Rotation Driven by AI Disruption Fears
Goldman Sachs equity strategist Ben Snider highlights that fresh announcements on AI tools from major tech firms rekindled concerns over AI potentially disrupting demand. That has prompted a shift into sectors viewed as insulated from AI-related risks rather than those benefiting from data-driven growth.
3. Low AI-Correlation Industries Gain Traction
Industries with weak correlation to software, such as construction machinery (0.3 correlation), oil & gas drilling (0.4) and cargo transportation (0.3), are seeing increased inflows. XLI’s weighting in names like Caterpillar and Halliburton positions it to benefit if this rotation persists.