In the first half of 2026, the Technology Select Sector SPDR Fund (XLK) led sector gains with a 33% return despite a June pullback due to AI spending concerns and Fed rate hike fears. The Energy sector (XLE) rose 21%, driven by supply disruptions and geopolitical tensions, while the Industrial sector (XLI) gained 20%, supported by AI data center growth and aerospace demand. Semiconductors bolstered tech performance, with strong contributions from Nvidia, Broadcom, and Micron. Energy gains were fueled by oil price premiums early in the year, and industrials benefited from increased equipment upgrades and defense spending. Investors remain cautious about AI infrastructure costs and inflation-driven rate hikes as the year progresses.
