The capital goods field consists of the industrials sector and is a category of company stocks that are in business to manufacture goods and distribute them to their customers. This is a wide field of operations and the sector contains many different types of companies producing machinery for manufacturing plants, electrical equipment, airplanes, military defense products, and construction equipment.
What are Capital Goods?
Capital goods are the physical assets that companies use to create products. Many capital goods are used in the manufacturing, construction, and production process to produce the goods that consumers use. Capital goods can include building structures, making machinery, producing equipment, automotive vehicles, and all types of tools used to fix things. Capital goods are not finished consumer goods, they are used by businesses to produce the consumer goods for the end customer.
Capital Goods Sector
These are company’s stocks in the XLI Industrial Select Sector SPDR ETF (exchange traded fund). This is an ETF that combines companies in the business of manufacturing or distributing physical goods.
Top XLI ETF Capital Goods Company Holdings:
Company/Ticker
Union Pacific Corp. UNP
Honeywell International Inc. HON
Raytheon Technologies Corp. RTX
Boeing Co. BA
Caterpillar Inc. CAT
Deere & Co. DE
General Electric Co. GE
3M Co. MMM
Lockheed Martin Corp. LMT
Caterpillar Inc. CAT
Northrop Grumman NOC
ABB Limited ABB
The strength of the capital goods sector is tied closely to the economic environment and capital expenditure budget of companies and governments. Industrial manufacturers have high orders and sales when the economy is booming and struggle during recessions. This sector is most closely correlated with the macroeconomic cycle with its stocks going up during an economic expansion and declining during an economic contraction.
