Per Zacks Earnings Trends issued on Aug. 29, 2024, earnings estimates for full-year 2024 have also been coming down lately, with estimates for 12 of the 16 Zacks sectors coming down since late June. Sectors suffering the major declines include Business Services, Consumer Discretionary, Energy, Transportation, Autos, and others. Estimates for the Tech, Finance, Retail, and Utilities sectors have increased in that period.
Against this backdrop, below we highlight four sectors that have seen increment in estimates and their related exchange-traded funds (ETFs).
Sector ETFs in Focus
Technology ETF
Technology Select Sector SPDR ETF (XLK)
U.S. technology stocks were under significant pressure in early August. However, the tech space showed signs of improvement from mid-August as investor positioning remained heavily weighted toward bullish sentiment despite early-August selloffs.
The AI rally is still hot. In a 2024 McKinsey survey, 39% of respondents saw lower costs resulting from AI adoption in their organization, according to Forbes. The technology sector is expected to record 17.8% earnings growth in 2024 on 6.9% revenue growth (read: Cybersecurity ETFs Won in August Despite Tech Volatility).
Finance ETF
Financial Select Sector SPDR ETF (XLF)
Financial ETFs have rebounded this year after a prolonged period of volatility. A flattening yield curve was a major concern over the past few years. However, decent global growth, cooling U.S. inflation and hopes of a Fed rate cut have now made the space a winner.
Since banks borrow money at short-term rates and lend capital at long-term rates, the steepening of the yield curve is always a plus for bank ETFs. The financial sector is expected to record 10.1% earnings growth in 2024 on 12.5% revenue decline (read: Time to Buy Financial & Bank ETFs?).
Retail ETF
SPDR S&P Retail ETF (XRT)
A lot of factors are favoring this sector. A decent consumer sentiment level, strong labor market and last-minute back-to-school/college shopping should give the space a boost. Plus, the sector should perform in a low-rate environment. The retail sales momentum too has been decent. The utilities sector is expected to record 12.5% earnings growth in 2024 on 4.5% revenue growth (read: Forget September Stock Slump: Buy These 5 ETFs Instead).
Utilities ETF
Utilities Select Sector SPDR ETF (XLU)
Utilities sector offers exposure to the utilities sector, which tends to be stable and provides consistent dividends. Utilities Select Sector SPDR ETF (XLU), which charges 9 bps in fees and yields 2.88% annually. The utilities sector is expected to record 7.6% earnings growth on 1.4% revenue growth (read: Defensive ETFs Shine Amid a Rough Start to September).
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Get it free >>Financial Select Sector SPDR ETF (XLF): ETF Research Reports
Technology Select Sector SPDR ETF (XLK): ETF Research Reports
SPDR S&P Retail ETF (XRT): ETF Research Reports
Utilities Select Sector SPDR ETF (XLU): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
