The S&P 500 Industrials Index represents the performance of companies in the S&P 500 that operate in the industrials sector, as defined by the Global Industry Classification Standard (GICS). This index is a subset of the S&P 500, encompassing areas such as aerospace and defense, construction, machinery, and transportation.
S&P 500 Industrials Index Price & Chart
Many industrial companies are often regarded as economic bellwethers due to their close ties to manufacturing, infrastructure, and global trade. The businesses play a critical role in driving productivity and innovation across the economy, making the sector essential to economic growth. For example, Caterpillar is a key name in the index.
Some of the other most prominent companies in this index include Boeing, Union Pacific, Honeywell, and Deere. In total, there are 78 companies included in the S&P 500 Industrials Index.
SP500-20 Index Performance
The index has performed mostly in line with the overall market in recent months and years. Over the last few years, it has performed extremely well, hitting new highs in November 2024 and eyeing the recent high after a dip in the earlier part of January.
As of January 2025, the index has delivered the following performance:
| Period | Total Return |
|---|---|
| 1-Year Return | +22.71% |
| 3-Year Return | +12.07% |
| 5-Year Return | +11.25% |
| 10-Year Return | +9.51% |
S&P 500 Industrials Top 10 Companies
The index is rebalanced quarterly in March, June, September and December. The top 10 make up 34.8% of the total weighting.
| Company | Market Cap |
|---|---|
| GE Aerospace | |
| Caterpillar | |
| RTX Corp | |
| Honeywell International | |
| Union Pacific | |
| Boeing | |
| Eaton Corp | |
| Uber | |
| Automatic Data Processing | |
| Deere |
US Industrials Sector Forecast
The Bull Argument: In its 2025 outlook, Fidelity said it believes the “outlook for 2025 may be bright, thanks to several sector-specific segments and themes, such as the recovery of inventory growth as post-pandemic overstocking diminishes.”
“A variety of factors is fueling a global push to bring supply chains onshore to reduce geopolitical risk, creating potential opportunity for companies that serve domestic construction projects,” said Fidelity sector portfolio manager David Wagner. “An aging air fleet has driven up demand for parts and maintenance, creating potential opportunity for companies that supply components and repair older planes.”
Meanwhile, government spending on projects could act as a tailwind for companies within the sector, while advancements in automation and supply chain technology could enhance productivity, improving profit margins for industrial firms.
The Bear Argument: However, Deloitte said in its outlook report that in 2025, manufacturers “are expected to continue to face a challenging and uncertain business climate due to a combination of higher costs, potential policy changes following the US and global elections, and geopolitical uncertainty.”
They added: “Surveyed manufacturers in NAM’s 2024 third-quarter outlook expect raw material and other input costs to grow by 2.7% over the next 12 months.”
From a general point of view, investors should also watch out for the potential for increased interest rates (given inflation has remained sticky), geopolitical uncertainty and supply chain disruptions, and slower-than-expected economic growth in key markets that could weigh on demand, creating a headwind for the sector.
Our View: The S&P 500 Industrials Index offers investors the ability to track a broad range of companies that are integral to economic growth and development. Essentially, the growth will come down to your view of the US economic climate and its future path. While the sector’s cyclical nature can introduce periods of volatility, ETFs tracking the index present opportunities for long-term capital appreciation, particularly during times of economic expansion. Overall, the current climate seems solid.
Who Should Invest in S&P 500 Industrials Stocks?
For those interested in gaining exposure to the sector, funds such as the Industrial Select Sector SPDR Fund (XLI) and the Vanguard Industrials ETF (VIS) track the index. These ETFs and investors in US-listed industrial stocks may have the following characteristics:
Cyclical investors: Industrial stocks tend to perform well during periods of economic growth, making the index attractive for those willing to tolerate market cycles.
Infrastructure-focused: With increased spending on infrastructure globally, the index provides an opportunity to benefit from this trend. The current US industrial production index (as of January 2025) looks solid.
