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Materials sector boosted by Fed's bond-buy move

NEW YORK (MarketWatch) -- Shares of Cliffs Natural Resources Inc., Alpha Natural Resources Inc. and Allegheny Technologies Inc. ranked among the top S&P 500 gainers Friday, as the materials sector continued a winning streak inspired by the Federal Reserve's latest stimulus plan.

Materials companies that are components of the Standard & Poor's 500 benchmark (SPX) saw their shares rise 1.3%, on average, as the second-highest of the index's 10 sub-sectors, outpaced only by energy.

Energy-sector components got a boost coinciding with the return of $100-a-barrel oil for the first time since May. See Futures Movers for more on oil prices.

Leading the charge in the materials sector, Cliffs Natural Resources (CLF) jumped 5.5% to $45.55. The stock has now risen about 8% in the past month, but it's still down 27% so far this year.

Alpha Natural Resources (ANR) , which mines metallurgical coal used to make steel, rose 3.9% to $8.55. The stock's tacked on 25% in the past month, but it remains down about 58% so far this year.

Also in the mix, crushed stone and sand specialist Vulcan Materials Co. (VMC) moved up by 4.7%, steel manufacturer Allegheny Technologies (ATI) jumped 5.7%, and mining equipment maker Joy Global Inc. (JOY) advanced by 4.4%.

The gains in the sector started mounting in recent sessions on growing expectations that the Fed would embrace another round of quantitative easing. The U.S. didn't disappoint investors Thursday. See related story.

Sam Stovall, an analyst with Standard & Poor's, cautioned that the global economy remains moribund, but he said investors appear to be betting that the Fed's moves will stoke higher infrastructure spending around the world.

The U.S. gross domestic product could tick up, sparking demand for goods from China and the materials to manufacture those products, Stovall said.

S&P currently has an underweight rating on materials in favor of overweight ratings on technology and consumer discretionary sectors, but Stovall said mining and metals firms could still benefit if equities markets continue to rise and corporate earnings advance.

"Materials stocks still have some of the weakest fundamentals, but to quote two old sayings in the stock market: 'Stock prices often lead fundamentals' and 'you can't fight the Fed.'"

The falling dollar's also contributing to higher commodities prices based on the U.S. currency, such as oil. Producers of these commodities and materials often benefit from higher prices, although they may also face increased input costs.