Wall Street delivered mixed performance in July. The Dow posted a modest monthly gain, marking its fourth consecutive positive month, per CNBC. The S&P 500 ended little changed for July, while the Nasdaq recorded a notable monthly decline as investors rotated away from high-growth technology stocks amid rising bond yields.Â
According to Morgan Stanley strategist Michael Wilson, the recent market correction marks a transition from high-growth momentum names to quality companies with consistent earnings, healthy margins and operational efficiency, per Bloomberg, as quoted on Yahoo Finance. He also highlighted insurance and healthcare equipment and services stocks as areas gaining investor interest.
Healthcare Equipment
State Street SPDR S&P Health Care Equipment ETFXHE
The 68-stock fund looks to provide exposure to the healthcare equipment segment of the S&P total market index, which comprises the following sub-industries: Health Care Equipment and Health Care Supplies.
It charges 35 bps in fees. Based on the underlying holdings of the fund, the ETF XHE has an estimated 3-5-year EPS growth rate of 11.42% compared with the S&P 500-based ETF SPY’s expected growth of 17.77%. Note that SPY is heavy on the high-growth and momentum Information Technology sector.
The forward price-to-earnings (P/E) ratio of the fund XHE is 19.76X compared with the S&P 500-based ETFSPY’s average P/E ratio of 33.36X and the Dow Jones-based ETF DIA’s average P/E ratio of 29.45X.
Although the broader medical sector of the S&P 500 is expected to post an earnings decline of 15.2% in the ongoing Q2 earnings season, projected earnings growth of 9.2%, 16% and 20.3% over the next three quarters, in sequential order, provides a reassuring outlook, according to the Earnings Trends report issued on July 29, 2026.
The 76-stock ETF offers exposure to financial services; insurance; banks; capital markets; mortgage REITs; and consumer finance industries. It charges 8 bps in fees. The ETF XLF has an estimated 3–5-year EPS growth rate of 12.23%.The forward P/E ratio of the fund is 16.15X.
The financials sector of the S&P 500 is expected to post earnings growth of 22.9% in the ongoing Q2 earnings season, followed by projected earnings growth of 3.9%, 8.1% and 8.9% sequentially over the next three quarters.
The 53-stock ETF offers exposure to Insurance Brokers, Life & Health Insurance, Multi-Line Insurance, Property & Casualty Insurance, and Reinsurance industries. It charges 35 bps in fees. The ETF KIE has an estimated 3-5-year EPS growth rate of 9.75%.The forward P/E ratio of the fund is 11.47X.
Consumer Staples
State Street Consumer Staples Select Sector SPDR ETFXLP
The 35-stock ETF offers exposure to companies from consumer staples distribution & retail; household products; food products; beverages; tobacco; and personal care products industries in the United States. It charges 8 bps in fees. The ETF XLP has an estimated 3-5-year EPS growth rate of 6.08%. The forward P/E ratio of the fund is 20.49X. The fund yields 2.59% annually.
The consumer staples sector is expected to remain steady, with projected earnings growth of 4.5%, 4.9% and 5.4% in Q2, Q3 and Q4, respectively.
The 82-stock fund includes companies from the following industries: aerospace and defense; industrial conglomerates; transportation infrastructure; machinery; commercial services and supplies; professional services; electrical equipment; construction and engineering; passenger airlines; and building products. The fund charges 8 bps in fees.
The ETF XLI has an estimated 3-5-year EPS growth rate of 16.11%. The forward P/E ratio of the fund is 26.47X.
Note that the industrials sector is cyclical rather than purely value-oriented. While many industrial stocks trade at attractive valuations, sectors like aerospace, defense and AI infrastructure command growth-like multiples.
The earnings profile remains robust for the industrials sector, with projected earnings growth of 12.1%, 13.8% and 16.4% in Q2, Q3 and Q4, respectively.
Boost Your Portfolio with Our Top ETF Insights
Zacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.
Don’t miss out on this valuable resource. It’s free!
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Keep it Clean. Please avoid obscene, vulgar, lewd,
racist or sexually-oriented language. PLEASE TURN OFF YOUR CAPS LOCK. Don't Threaten. Threats of harming another
person will not be tolerated. Be Truthful. Don't knowingly lie about anyone
or anything. Be Nice. No racism, sexism or any sort of -ism
that is degrading to another person. Be Proactive. Use the 'Report' link on
each comment to let us know of abusive posts. Share with Us. We'd love to hear eyewitness
accounts, the history behind an article.
(0) comments
Welcome to the discussion.
Log In
Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.