Despite encouraging market signals — from easing fears over AI valuations to optimism surrounding trade policy — signs are emerging that U.S. consumers are feeling financially stretched. Recent earnings reports from major consumer-facing companies, including McDonald’s, are offering such cues.
The latest commentary from McDonald’s CEO Chris Kempczinski pointed out that lower-income households are cutting back on discretionary spending, with quick-service restaurant (QSR) traffic from lower-income group falling by nearly double digits in the third quarter, a trend that lasted for two consecutive years, as mentioned on CNBC.
Why to Bet on High Earnings Growth Sectors?
While the economy continues to feel the pinch from high costs and eroding savings (probably due to still-high interest rates and higher tariffs), Wall Street should benefit from sectors with durable earnings power and exposure to wealthier consumers or emerging growth concepts like AI and infrastructure.
If consumer weakness persists through 2026, the potential market rally may hinge on companies that are less dependent on broad-based discretionary spending and more on innovation, technological advancements and pricing power.
Against this backdrop, below we highlight a few sectors and their related exchange-traded funds (ETFs) that are expected to post strong earnings growth ahead.
Sector ETFs in Focus
For 389 of the S&P 500 members that have reported Q3 results, total earnings are up 14.6% from the same period last year on 8.3% higher revenues, with 83.5% beating EPS estimates and 75.6% beating revenue estimates. The proportion of these 389 index members beating both EPS and revenue estimates is 67.1%.
With respect to growth, Q3 earnings are expected to be above the year-earlier level for 11 of the 16 Zacks sectors, with double-digit growth at the Aerospace (+76.5%), Tech (+24.7%), Finance (+24.4%) and Retail (+15.3%) sectors, per the Earnings Trends issued on Nov. 5, 2025.
Aerospace – iShares U.S. Aerospace & Defense ETF ITA
The Aerospace sector has recorded 76.5% earnings growth (the highest among the S&P 500 sectors) so far on 14.6% higher revenues. Earnings growth is expected to be 65.1%, 4.3% and 13.3% in Q4 of 2025, Q1 of 2026 and Q2 of 2026 on respectively 12.1%, 6.5% and 4.4% higher revenues, per the Earnings Trends.
Technology – Technology Select Sector SPDR ETF XLK
The Technology sector has logged 24.7% earnings growth so far on 14.4% higher revenues. Earnings growth is expected to be 10.9%, 12.4% and 17.8% in Q4 of 2025, Q1 of 2026 and Q2 of 2026 on respectively 13.2%, 14.0% and 12.4% higher revenues, per the Earnings Trends.
Financials – Vanguard Financials ETF VFH
The Financials sector has reported 24.4% growth in earnings so far on 8.5% higher revenues. Earnings growth is expected to be 15.8%, 15.7% and 8.6% in Q4 of 2025, Q1 of 2026 and Q2 of 2026 on respectively 8.5%, 7.3% and 6.8% higher revenues.
Retail – State Street SPDR S&P Retail ETF XRT
The Retail sector has reported 15.3% growth in earnings so far on 6.2% higher revenues. Earnings growth is expected to be 3.6%, 7.8% and 9.0% in Q4 of 2025, Q1 of 2026 and Q2 of 2026 on respectively 5.8%, 7.5% and 6.3% higher revenues.
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Technology Select Sector SPDR ETF (XLK): ETF Research Reports State Street SPDR S&P Retail ETF (XRT): ETF Research Reports iShares U.S. Aerospace & Defense ETF (ITA): ETF Research Reports Vanguard Financials ETF (VFH): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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