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Tickers in this Article: XLI, GE, UTX, CAT, MMM, BA
Home to over $3.1 billion in assets under management and an expense ratio of just 0.18%, the 63-stock Industrial Select Sector SPDR (NYSE: XLI) is the largest and cheapest ETF tracking stocks with industrials label on the market. While the Industrial Select Sector SPDR isn't a tracking ETF for the venerable Dow Jones Industrial Average, the fund is home to five Dow components and all five reside among XLI's top-10 holdings. Those five - General Electric (NYSE: GE), United Technologies (NYSE: UTX), Caterpillar (NYSE: CAT), 3M (NYSE: MMM) and Boeing (NYSE: BA) - all fit the bill as cyclical names. That's especially true of Caterpillar, the world's largest maker of construction and mining equipment, and aerospace juggernaut Boeing.

Put another way, it takes more than just some decent earnings reports to move XLI and its constituents. Rosy economic data points are not only helpful to XLI's upside, they're basically mandatory for an ETF of this nature to move higher.

The earnings/data dichotomy for XLI was on full display on Wednesday as the Commerce Department said durable goods orders tumbled 4.2% in March, the biggest decline sine January 2009. Economists expected a drop of just 1.7%. The February reading was revised lower to an increase of 1.9% from a previous reading of 2.4%. On its own, that durable goods number would have probably been a hindrance for XLI, but...

...In earnings news, Illinois-based Caterpillar reported a first-quarter profit of $1.59 billion net income, or $2.37 per share, compared with $1.23 billion net income, or $1.84 per share, a year earlier. Revenue rose 23% to $15.98 billion. Analysts expected a profit of $2.13 per share on revenue of $16.18 billion. Not bad, but shares of Caterpillar, which accounts for 5.4% of XLI's weight, plunged 4.6%.

That left a lot of the heavy lifting to Boeing. The aerospace giant said its first-quarter profit rose to $923 million, or $1.22 per share, from $586 million, or 78 cents per share, a year earlier. Revenue increased 30% to $19.4 billion. On an adjusted basis, Boeing earned $1.11 a share. Analysts expected a profit of 94 cents on revenue of $18.4 billion.

Boeing raised its full-year profit guidance to $4.15-$4.35 a share from $4.15-$4.25. Boeing still expects 2012 revenue of $78-$80 billion. Boeing, which also receives an allocation north of 5% in XLI, jumped 5.3% due to its strong guidance.

Boeing was one of the main reasons why XLI was able to escape with a small gain of 0.2%, but that middling performance only underscores that this ETF is beholden to economic data, good or bad.

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