James Brumley, The Motley Fool Fri, November 13, 2026 at 11:03 AM EST 7 min read NVDA -4.27% XLK -3.37% XLV +0.23% XLF +0.62% XLE +0.44% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Where do the market's key sectors -- represented by the State Street Technology Select Sector SPDR ETF (NYSEMKT: XLK), State Street Financial Select Sector SPDR ETF (NYSEMKT: XLF), State Street Energy Select Sector SPDR ETF (NYSEMKT: XLE), and the State Street Health Care Select Sector SPDR ETF (NYSEMKT: XLV) -- currently stand?
With the end of 2026 now in sight, it's not too soon to start asking these questions as part of your planning for 2027. To this end, here's a closer look at each one.
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The year didn't start out particularly great for technology stocks, peeling back from a peak made in late 2025. By March, however, the bottom had been made. By October, the State Street Technology Select Sector SPDR ETF had rallied more than 50% off that March low to reach another new high.
Somehow, the pullback from that particular peak feels a little bit different than any of the other ones, though. For the first time in a long time, a handful of AI companies, including Alphabet and Amazon, either missed some of their third-quarter estimates, issued disappointing guidance, or both.
These red flags also made the negative free cash flows of some AI companies all the more concerning. Given that these stocks were already relatively expensive, it's not surprising that XLK now sits 14% below that October high despite a small bounce from its early-November low.
So now what? Contrary to the growing rhetoric, the artificial intelligence (AI) industry as we know it isn't doomed. This technology brings practical, marketable value to consumers and corporations, even if it won't be integrated into every aspect of our lives and work as initially implied.
This recent weakness is arguably just a much-needed reset of these stocks' prices to more reasonable levels, not unlike the dot-com crash of 2000. Many of those companies are still around. Many of their stocks simply got too far ahead of themselves relative to results.
In other words, while volatility could linger for a while and future gains may not be as red-hot as they have been in the recent past, with a forward-looking price-to-earnings ratio of just above 20, the State Street Technology Select Sector SPDR ETF and most of the tech stocks that make up this fund are still quite ownable.
Despite several ups and downs since the end of last year, the State Street Financial Select Sector SPDR ETF is still more up than down, sitting nearly 10% above 2025's closing price. Just be wary of making any sweeping assumptions about that number.
Insurance stocks have done almost all of the heavy lifting. Most asset managers and capital markets specialists have lost value this year, while bank stocks like Bank of America and Wells Fargo have logged only modest gains.
Interest rates and the economic backdrop driving them higher get the blame/credit. Higher interest rates generally mean insurance companies earn more money on the cash they keep on hand to cover claims. At the same time, while higher interest rates typically make lending a more profitable business for banks, demand for new loans is currently relatively tepid because the cost of borrowing is up. The market may also be pricing in worry about future loan losses if the economy doesn't improve.
To this end, a recent survey of bank executives conducted by IntraFi indicates that 83% expect the economy to remain the same or even worsen over the next 12 months. This is arguably a scenario where the smart move isn't buying into an entire sector, but rather, strategically stepping into one of the sector's industries while avoiding other slivers of the group.
Given the persistently high price of crude oil of late, it comes as no real surprise that the State Street Energy Select Sector SPDR ETF is up more than 40% year to date, in step with oil's gain of more than 50%. Just recognize that this performance could be nearly impossible to repeat in 2027. Indeed, energy stocks like Chevron and ExxonMobil may be headed for a period of subpar performance.
A big part of this counterintuitive headwind stems from the fact that, at its current price of just under $90 per barrel, oil may be about as high as it can go under any circumstances. Although crude briefly traded above that mark back in mid-2022, the sharp pullback from that high confirms that once crude oil's price reaches this area, companies and consumers start shopping around for alternatives, in whatever form they're available.
This includes new exploration and drilling, investments in renewables, and the purchase of electric vehicles, all of which either weaken oil demand or expand its limited supply, which might otherwise continue to push prices up. We're already seeing it, in fact.
This might make the point: While its price may still be elevated thanks to its brief move to nearly $90 per barrel around the middle of this year, the U.S. Energy Information Administration still predicts crude prices will slide to an average of around $80 in 2027.
Most of these stocks are still fantastic dividend payers, though.
Finally, it's been a surprisingly good year for healthcare stocks. Although regulatory uncertainty remains an overhang and several of the major pharmaceutical names, including Merck, Pfizer, and Johnson & Johnson, are in the midst of major overhauls to their drug portfolios, the State Street Health Care Select Sector SPDR ETF is up 21% since the end of last year, led by these very drugmakers. It's been a pretty solid year for biotechnology stocks as well.
Just be careful if you're venturing in. Although the future is finally bright again for the business after a long post-COVID dry spell, XLV is slightly overvalued given its technical overbought condition. At a tad over 22, this ETF's forward-looking price-to-earnings ratio is above long-term norms, suggesting the market's pricing in results that are unlikely to materialize until 2028 or so.
In other words, it wouldn't be wrong to hold out for a decent price pullback here. Whatever the case, just keep in mind that the healthcare sector isn't exactly known for high growth. Keep your expectations of the relatively slow-moving industry in check.
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Bank of America is an advertising partner of Motley Fool Money. Wells Fargo is an advertising partner of Motley Fool Money. James Brumley has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Amazon, Chevron, Merck, and Pfizer. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
Where These 4 Sector ETFs Stand Heading Into Year-End was originally published by The Motley Fool
