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. 

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 ETF XHE

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.

Broader Financials

State Street Financial Select Sector SPDR ETF XLF

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.

Insurance

State Street SPDR S&P Insurance ETF KIE

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 ETF XLP

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.

Industrials

State Street Industrial Select Sector SPDR ETF XLI

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.

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State Street Financial Select Sector SPDR ETF (XLF): ETF Research Reports

 

State Street Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports

 

State Street Industrial Select Sector SPDR ETF (XLI): ETF Research Reports

 

State Street SPDR S&P Insurance ETF (KIE): ETF Research Reports

 

State Street SPDR S&P Health Care Equipment ETF (XHE): ETF Research Reports

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research