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The second-quarter 2025 earnings season will kick off next week, with banking sector players due to report numbers. The overall picture ahead of this reporting cycle is one of continued resilience and a steadily improving outlook.
Total S&P 500 earnings are expected to be up 4.9% from the year-ago period on 3.9% higher revenues, per the latest Earnings Trends report. While negative revisions to Q2 estimates have stabilized in recent weeks, estimates for the period have been under significant pressure relative to other recent periods since the June quarter got underway.
Of the 16 Zacks sectors, nine are expected to post earnings growth in the second quarter, with the strongest gains in the Consumer Discretionary sector (105.6%), followed by Aerospace (15.1%), Technology (11.8%), Finance (7.8%) and Utilities (7.7%). In particular, earnings of the “Magnificent 7” companies are expected to be up 11.3% from the same period last year on 11.2% higher revenues.
We have highlighted ETFs, one each from the abovementioned sectors, that could make great plays as the earnings season unfolds.
Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space and tracks the Consumer Discretionary Select Sector Index. It holds 51 securities in its basket, with hotels, restaurants and leisure, broadline retail, specialty retail, and automobiles having a double-digit allocation each. Consumer Discretionary Select Sector SPDR Fund is the largest and most popular product in this space, with AUM of $22.5 billion and an average daily volume of around 4 million shares. It charges 0.08% in expense ratio and has a Zacks ETF Rank #3 (Hold).
iShares U.S. Aerospace & Defense ETF provides exposure to U.S. companies that manufacture commercial and military aircraft and other defense equipment by tracking the Dow Jones U.S. Select Aerospace & Defense Index. iShares U.S. Aerospace & Defense ETF holds 38 stocks in its basket with AUM of $8.4 billion and an expense ratio of 0.40%. It trades in an average daily volume of around 743,000 shares and has a Zacks ETF Rank #1 (Strong Buy) (read: 5 Top-Ranked ETFs of 1H25 Poised to Stay Strong in 2H).
Vanguard Information Technology ETF manages $95 billion in its asset base and provides exposure to 319 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Semiconductors, systems software, technology hardware storage & peripherals, and application software are the top four sectors. Vanguard Information Technology ETF has an expense ratio of 0.09% and trades in an average daily volume of 501,000 shares. It has a Zacks ETF Rank #1.
Financial Select Sector SPDR Fund seeks exposure to 73 companies in the financial services, insurance, banks, capital markets, mortgage real estate investment trusts, consumer finance, and thrifts and mortgage finance industries. Financial Select Sector SPDR Fund is an ultra-popular financial ETF with AUM of $51.3 billion and average daily volume of 38 million shares. It charges 8 bps in annual fees and has a Zacks ETF Rank #1 (read: Financial ETF (XLF - Free Report) Touches New 52-Week High).
With an AUM of $19.1 billion, Utilities Select Sector SPDR seeks to provide exposure to companies from the electric utility, water utility, multi-utility, independent power and renewable electricity producers, and gas utility industries. It follows the Utilities Select Sector Index, holding 31 stocks in its basket. Utilities Select Sector SPDR charges 8 bps of annual fees and trades in an average daily volume of 13 million shares. It has a Zacks ETF Rank #2 (Buy).
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5 Sector ETFs Set to Power Q2 Earnings Growth
The second-quarter 2025 earnings season will kick off next week, with banking sector players due to report numbers. The overall picture ahead of this reporting cycle is one of continued resilience and a steadily improving outlook.
Total S&P 500 earnings are expected to be up 4.9% from the year-ago period on 3.9% higher revenues, per the latest Earnings Trends report. While negative revisions to Q2 estimates have stabilized in recent weeks, estimates for the period have been under significant pressure relative to other recent periods since the June quarter got underway.
Of the 16 Zacks sectors, nine are expected to post earnings growth in the second quarter, with the strongest gains in the Consumer Discretionary sector (105.6%), followed by Aerospace (15.1%), Technology (11.8%), Finance (7.8%) and Utilities (7.7%). In particular, earnings of the “Magnificent 7” companies are expected to be up 11.3% from the same period last year on 11.2% higher revenues.
We have highlighted ETFs, one each from the abovementioned sectors, that could make great plays as the earnings season unfolds.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) )
Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space and tracks the Consumer Discretionary Select Sector Index. It holds 51 securities in its basket, with hotels, restaurants and leisure, broadline retail, specialty retail, and automobiles having a double-digit allocation each. Consumer Discretionary Select Sector SPDR Fund is the largest and most popular product in this space, with AUM of $22.5 billion and an average daily volume of around 4 million shares. It charges 0.08% in expense ratio and has a Zacks ETF Rank #3 (Hold).
iShares U.S. Aerospace & Defense ETF (ITA - Free Report) )
iShares U.S. Aerospace & Defense ETF provides exposure to U.S. companies that manufacture commercial and military aircraft and other defense equipment by tracking the Dow Jones U.S. Select Aerospace & Defense Index. iShares U.S. Aerospace & Defense ETF holds 38 stocks in its basket with AUM of $8.4 billion and an expense ratio of 0.40%. It trades in an average daily volume of around 743,000 shares and has a Zacks ETF Rank #1 (Strong Buy) (read: 5 Top-Ranked ETFs of 1H25 Poised to Stay Strong in 2H).
Vanguard Information Technology ETF (VGT - Free Report)
Vanguard Information Technology ETF manages $95 billion in its asset base and provides exposure to 319 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Semiconductors, systems software, technology hardware storage & peripherals, and application software are the top four sectors. Vanguard Information Technology ETF has an expense ratio of 0.09% and trades in an average daily volume of 501,000 shares. It has a Zacks ETF Rank #1.
Financial Select Sector SPDR Fund (XLF - Free Report)
Financial Select Sector SPDR Fund seeks exposure to 73 companies in the financial services, insurance, banks, capital markets, mortgage real estate investment trusts, consumer finance, and thrifts and mortgage finance industries. Financial Select Sector SPDR Fund is an ultra-popular financial ETF with AUM of $51.3 billion and average daily volume of 38 million shares. It charges 8 bps in annual fees and has a Zacks ETF Rank #1 (read: Financial ETF (XLF - Free Report) Touches New 52-Week High).
Utilities Select Sector SPDR (XLU - Free Report) )
With an AUM of $19.1 billion, Utilities Select Sector SPDR seeks to provide exposure to companies from the electric utility, water utility, multi-utility, independent power and renewable electricity producers, and gas utility industries. It follows the Utilities Select Sector Index, holding 31 stocks in its basket. Utilities Select Sector SPDR charges 8 bps of annual fees and trades in an average daily volume of 13 million shares. It has a Zacks ETF Rank #2 (Buy).