Honeywell, which represents about 5% of the XLI’s current holdings, cut its third quarter guidance this morning amid ongoing restructuring costs. The company also offered lower-than-expected fourth quarter and full-year earnings guidance, sending its shares plunging as much as 8% in early trading.
HON’s pullback has spread to other Industrial stocks as well, with Textron shares down 3.7%, and General Dynamics off 1.2%, although those names had suffered much steeper losses earlier this morning before paring some of their declines.
The XLI, which boasts over $7 billion in assets with an expense ratio of 0.14%, is the largest ETF in the Industrial Equities Sector. Analysts expect the sector to receive a big boost following this year’s presidential election, with both Hillary Clinton and Donald Trump seen as bullish for infrastructure spending.
XLI fell $0.74 (-1.27%) to $57.57 per share in Friday morning trading. Year-to-date, XLI has risen 8.68%, versus a 5.58% gain in the benchmark S&P 500 index during the same period.
The PowerShares Aerospace & Defense ETF (NYSE:PPA) also pulled back on the Honeywell news, down 1.53%. PPA has the largest exposure to HON of any ETF, with about 6.51% of its holdings concentrated in HON stock.