We entered the third quarter a week ago with little surge on the virus front.Though multiple states in the United States have lifted COVID-19 restrictions, almost half of United States reported rising cases recently, thanks largely to delta variant. Alaska and Arkansas more than doubled the cases in just last week. Cases in South Carolina and Kansas are up more than 50%.

The ISM Services for June came in a little bearish, coming in 320 basis points lower on its survey headline than expected, to 60.1%. It was also off May’s record high of 64.0%. Price increases and worker shortages seem to account for the relative headwinds. Still, the reported data were way above the breakeven level of 50%. The ISM manufacturing index has also come in upbeat with a reading of 61.2, beating the estimate of 60.5.

Meanwhile, jobs data came in robust. The U.S. economy added 850,000 jobs in June 2021 (after rising 559,000 in May), beating market expectations of a rise of 700,000 thanks to easing business restrictions amid reopening of economies, lower coronavirus infection rates and vaccine distribution from multiple makers (read: 5 Sector ETFs to Play Robust June Jobs Data).

Against this backdrop, below we highlight three sectors that emerged as winners recently and hold promise for the entire quarter.

Technology

‘‘Disruptive innovation’’ in technology has probably been the most sought-after in recent times as coronavirus-led social distancing and contactless activities enhanced the need for technological advancement. The touch of technology is highly demanding now in the field of Genomic Revolution, industrial innovation in energy, automation and manufacturing, shared technology, infrastructure and services and last but not the least Fintech, if we go by ARK Funds.

Moreover, the tech sector was a little muted in the first half of 2021, offering compelling valuation at the current level.  With the spread of the delta variant causing concerns, tech ETFs are likely to rule in the third quarter. Technology Select Sector SPDR Fund (XLK Quick QuoteXLK - Free Report) has a Zacks Rank #2 (Buy). XLK gained 9.3% in the past three months and is up for more gains.

Online Retail

The pandemic has led to an e-commerce boom and changed the consumer landscape into a purely digital one. As more Americans prefer online shopping even post pandemic, the online retail ETF will continue to get a boost. ProShares Online Retail ETF (ONLN Quick QuoteONLN - Free Report) gives exposure to retailers that principally sell online or through other non-store channels. The fund charges 58 bps in fees. ONLN was down 0.1% in the past three months and may recoil ahead (read: Here's Why Retail ETFs Are Good Picks Right Now).

Industrials

Wall Street cheered up last month on President Joe Biden’s announcement of the White House striking an infrastructure deal with a bipartisan group of senators. According to the White House, the infrastructure deal will include $579 billion in new spending. Going by a CNBC article, the proposal will allocate about $312 billion to transportation, with $109 billion going for development in roads, bridges and other major projects, $66 billion in passenger and freight rail and $49 billion in public transit. Furthermore, $266 billion will be allocated toward non-transportation infrastructure, including $73 billion for power, $65 billion for broadband and $55 billion for water.

Invesco Water Resources ETF (PHO Quick QuotePHO - Free Report) could be a good pick in this regard. The underlying NASDAQ OMX US Water Index tracks the performance of U.S. exchange-listed companies that create products designed to conserve and purify water for homes, businesses and industries. The fund is up 6.6% so far and may be up for more growth.

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