LIVE MARKETS-DataTrek's 2026 tip sheet on which S&P 500 sectors might be primed for a ride

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DATATREK'S 2026 TIP SHEET ON WHICH S&P 500 SECTORS MIGHT BE PRIMED FOR A RIDE

Nicholas Colas, co-founder of DataTrek Research, is taking a look at S&P 500 index .SPX sectors, and he has some thoughts on which horses investors might want to jump on for 2026.

According to Colas, only three groups have outperformed the S&P 500 since the start of the current bull market three years ago through last Friday's close: Communication Services (+34.4% CAGR), Tech (+32.2% CAGR), and Consumer Discretionary (+23.3% CAGR).

"All have major Big Tech weightings, so no surprises here," writes Colas in a note.

Two groups have performed reasonably well: Financials (+17.1% CAGR) and Industrials (+16.9% CAGR).

However, he says that six of the 11 S&P sectors have posted just mediocre 3-year compounded annual price returns: Utilities (+6.7%), Materials (+5.1%), Healthcare (+4.3%), Real Estate (+3.3%), Consumer Staples (+2.1%), and Energy (+1.3%).

Colas makes three points on analysts’ expected sector-level upside:

First he says that The Street believes that the three winning groups of the last three years will continue to outperform, with Tech expected to gain +19.8% in 2026, Consumer Discretionary +16.8%, and Communication Services +15.8%.

As for historically underperforming sectors that might beat the S&P 500 in 2026, he says that analysts believe Real Estate, Materials, and Utilities can see their fortunes get better. That said, analysts see five of the S&P’s 11 sectors continuing to underperform in 2026: Consumer Staples, Industrials, Energy, Healthcare, and Financials.

Colas' takeaway is that based on Wall Street analysts’ price targets, the S&P 500 sectors most likely to see a beneficial momentum shift in 2026 are Real Estate, Materials, and Utilities.

"In the context of declining interest rates and strong commodity prices, these groups make sense to us as well," writes Colas.

(Terence Gabriel)

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