The U.S. basic materials sector closed higher on Friday, February 15, 2026, finding support from a key inflation report that suggested easing price pressures. The Materials Select Sector SPDR ETF (XLB), a key benchmark for the industry, gained 0.91% to settle at $53.31. The trading session highlighted the sector's sensitivity to macroeconomic data and shifting trade policy winds, setting up a complex week ahead with markets closed Monday for the Presidents' Day holiday.
Inflation Data Provides Tailwind
The Labor Department reported that U.S. consumer prices increased 0.2% in January. More notably, the core Consumer Price Index (CPI), which excludes volatile food and energy components, rose 0.3% for the month. On an annual basis, core inflation slowed to 2.5%, marking its most modest pace in nearly five years. This deceleration bolstered market expectations for future interest rate cuts from the Federal Reserve, a dynamic that typically supports materials and industrial metals. "While price pressures remain somewhat elevated, the trajectory is clearly moving lower," commented a senior economist, reflecting a cautiously optimistic view on the inflation outlook.
Copper's Conflicting Signals
Copper futures demonstrated resilience, closing Friday's session with a 0.30% gain at $5.8030 per pound. However, this price strength exists alongside a substantial and growing overhang of supply. Total copper inventories tracked across major exchanges have surged past 1.1 million metric tons, a level not consistently seen since early 2003. Market analysts note that this inventory build tells a more mundane story of ample physical supply, potentially at odds with the narrative of tight markets driving record prices. The disconnect between price action and inventory data presents a key risk for copper bulls in the coming weeks.
Steel and Aluminum Hit by Trade Policy Jitters
In contrast to the broader sector's gains, steel and aluminum equities faced significant selling pressure. The decline was triggered by market chatter regarding the potential for the administration to impose a blanket 25% tariff on imports of both metals. White House trade adviser Peter Navarro later told Reuters that there was "no basis" for such reports, attempting to quell the fears. Nevertheless, the damage was done: Nucor (NUE) shares fell nearly 3%, Steel Dynamics declined 3.9%, and Century Aluminum plummeted 7.4%. The selloff underscored the sector's acute vulnerability to sudden shifts in trade policy, especially ahead of a long market weekend. "Given the approaching three-day break, it's unsurprising to see the market react defensively to any uncertainty," a trader noted.
Notable Single-Stock Movers
Among individual equities, mining giants led the advancers. Freeport-McMoRan (FCX), a major copper producer, climbed 1.29% to close at $62.84. Gold producer Newmont (NEM) saw a more substantial surge, jumping 6.50% to end the day at $125.80, potentially benefiting from the shift in rate expectations. The broader S&P 500 Materials index finished up 1.10% at 669.59.
ETF Context and Technical Posture
The XLB ETF saw robust volume of nearly 20 million shares traded on Friday. The fund, which tracks the Materials Select Sector Index and holds companies involved in chemicals, metals and mining, construction materials, and packaging, continues to trade near the upper end of its 52-week range of $36.56 to $54.14. Its performance remains closely tied to fluctuations in the U.S. dollar and bond yields, as global commodities are predominantly priced in dollars.
Looking Ahead: A Data-Packed Week
Following the Monday holiday, traders will return to a dense calendar of economic releases that could dictate the sector's near-term direction. The week resumes on Tuesday with January retail sales figures and the Empire State manufacturing survey. The Federal Reserve will release the minutes from its latest policy meeting on Wednesday, offering further insight into officials' views on inflation and the potential timing of rate cuts. The week concludes on Friday with the second estimate of U.S. Gross Domestic Product (GDP) for the fourth quarter. The materials sector's recent rally, fueled by hopes of cooling inflation and lower yields, faces clear tests from these data points, as well as from the physical reality of rising copper stockpiles and the ever-present specter of trade disruptions.
