Over the past quarter, equity markets have soared despite low levels of economic growth in much of the developed world. Arguably, one of the biggest gainers during this time period has been the materials and commodity sectors, which have jumped due to a weak dollar and prospects of a further shrinking greenback thanks to expectations of the Federal Reserve's QE2 program. Due to this increased demand and a weak dollar, many materials companies have surged to new highs, one of the biggest and most famous of these companies is undoubtedly E.I. du Pont de Nemours & Co.
This looks to be the case again today as DD reports its third quarter 2010 earnings before the bell. The company is projected to post earnings of $0.34 a share and $6.76 billion in revenues, which represents a sharp decrease from last year's earnings that came in at 45 cents a share. "The improving global economy is boosting demand for the company's products, including paint and plastic for the auto market and materials to build solar panels," wrote Ernest Scheyder for Reuters. "However, quarterly profit could be dented by DuPont's aggressive spending on research in its agricultural unit to compete with rival Monsanto Co." Nevertheless, DD has seen its shares surge by close to 39% year-to-date, and with the company hitting its 52-week high in terms of stock price, the company could be in for a sharp drop if it fails to meet expectations. And that would likely spur investors to lock in some of their profits and sell off shares of the company [use our ETF Stock Exposure Tool to find out which ETFs offer exposure to your favorite companies].
Due to this earnings report, we have decided to make the Materials Select Sector SPDR
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Disclosure: No positions at time of writing, photo is courtesy of Mytho88.
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