Energy and Industrials Are Quietly Beating the S&P 500 in 2026 — Here's What's Driving It

Information technology stocks including Nvidia, Apple, Microsoft and Alphabet account for a whopping 38% of the S&P 500 index, and they typically get a lot of the attention from investors. But there are some other sectors beating the overall index in 2026 that can offer generous returns over time.

While the State Street SPDR Portfolio S&P 500 ETF is up around 10% year-to-date, State Street's sector-specific data shows that its energy-focused exchange-traded fund (ETF) is up around 30% and its industrials-focused one has jumped roughly 15% for the year.

2 sectors beating the S&P 500

Here's what to know about the two sectors.

Industrials

Industrial and infrastructure companies are the backbone of many of the organizational structures that support the economy. This sector includes aerospace, heavy machinery and data center construction. Many mature companies in this industry have high yields and low volatility, which is a good combination for investors and especially retirees who may be trying to stay away from higher-risk sectors. Their strong performance this year is in part due to companies spending on data center buildouts.

Industrials make up roughly 9% of the S&P 500. Many of these companies are durable and offer dividends.

Energy

The energy sector consists of companies that produce and distribute energy, including gas, oil and renewable energy businesses. Some of the major players are the gas companies brands that you'll likely recognize from filling your car's tank, such as Exxon Mobil and Chevron.

Energy stocks can be volatile, since their prices are often tied to supply and demand. They have been particularly volatile this year amid the War in Iran and blockades of the Strait of Hormuz. But high oil prices have generally given them a boost. Plus, "structural demand from the global energy transition and energy security provide support for the sector and is driving investment in production capacity," experts at Charles Schwab wrote in June.

Energy stocks make up around 3% of the overall S&P 500 index.

How to incorporate these sectors

Review your asset allocation. It’s common for investors to pursue growth stocks with strong momentum, and many of those same companies are in the tech sector. However, putting too many of your eggs in one basket can leave your portfolio vulnerable during a market correction.

Investors who are heavily concentrated in tech may want to consider diversifying into lower-volatility sectors like industrials. That way, your portfolio ideally won’t drop as much during corrections, and these same stocks can provide higher yields than the biggest tech companies. Energy stocks can also offer some diversification from tech stocks.

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Investors can look for individual stocks in each of these sectors by reviewing the S&P 500’s holdings across those industries. However, you can also buy ETFs that track the sectors you want to prioritize as you reconstruct your portfolio.

You don’t have to build your portfolio from the ground up if it isn’t diversified enough. However, it is smart to build a diversified foundation instead of putting all of your capital into flashy, high-risk stocks.