At the start of the second half of 2026, the technology sector looked like it would give back some of its gains. Instead, software and semiconductor stocks both traded higher. Fear that AI would replace consulting companies dissipated, too.
Shares of S&P Global (SPGI), Gartner (IT), and Accenture (ACN) erased most of their losses.
Tech ETFs like QQQ Trust, Vanguard Information Technology (VGT), and the Semiconductor ETF (SMH) are winning holdings.
The energy sector should reward investors, too. Despite renewed hopes of peace, the Energy Select Sector (XLE) ETF rises as oil prices jump.
Losing ETFs
Consumer discretionary firms will likely face profit margin pressures. Be wary of holding the XLY ETF. The ETF holds Home Depot (HD), TJX Companies (TJX), and McDonald’s (MCD). As consumers spend more on gas, they might buy less clothing and eat out less often.
The ETF also holds Amazon (AMZN). Amazon is spending heavily on AI hardware. Demand for AI servers continues to outstrip supply.
Be wary of bond ETFs. Interest rates increased by only 25 bps, but markets expect more. The U.S. government is financing its debt with short-term debt. That pressures long-term bonds, raising their yield.
The 10-year Treasury bond might break out above 5.0% in the coming weeks. Weak demand for U.S. debt might push the 30-year Treasury bond to around 5.4%.
