Key Points
Shares of steelmaker and miner Cleveland-Cliffs (NYSE: CLF) had been treading water over the past several months until this week. The stock jumped nearly 10% for the week, according to data provided by S&P Global Market Intelligence.
The stock recovered from a drop the previous week after one industry analyst downgraded it. But a bullish view of the sector led investors to buy that dip this week.
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Last week, Analyst Philip Gibbs of Keybanc downgraded the stock to the equivalent of a neutral rating on valuation concerns. He feels major catalysts are behind the company and sees increased costs due to an evolving product mix. With shares up more than 50% in the last six months, good news may already be reflected in the share price.
Yet steel stocks have been climbing thanks to increased demand from the infrastructure, construction, and automotive sectors, alongside supply side factors such as tariffs. These factors are driving up prices and profit margins for domestic producers. Anticipation of economic recovery, possible interest rate reductions, and robust government infrastructure investment are driving optimism, boosting valuations for steel companies.
Shares of domestic peer Nucor have also been trending higher. That stock has jumped nearly 7% since the start of the year. This earnings season will be critical to see whether all domestic steelmakers are benefiting from robust demand or whether the gains are company-specific. That should determine the next moves for these stocks.
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Howard Smith has positions in Nucor and has the following options: short February 2026 $180 calls on Nucor and short March 2026 $200 calls on Nucor. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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