December 8, 2025

Top-Ranked ETFs to Power Your Portfolio Higher

While the S&P 500 ended November on a relatively flat note, the headline number masked the volatility seen throughout the month. Encouragingly, the broad market index has kicked off December on a stronger note, gaining roughly 0.9% over the past week.

With several top banks forecasting the S&P 500 to reach 7,500-8,000 by the end of next year, along with increasing bets of a Fed rate cut in December, optimism is steadily returning to Wall Street. According to the CME FedWatch tool, markets are anticipating an 87.4% likelihood of interest rates being lowered to 3.5-3.75% in its December meeting, a sharp rise from the odds just a month earlier.

Per the Commerce Department, as quoted on CNBC, the core personal consumption expenditures (PCE) price index for September rose 2.8% year over year, slightly below the 2.9% estimate from Dow Jones. September’s core PCE increased 0.2%, matching expectations, while headline PCE inflation readings for both the month and year also met forecasts.

According to the University of Michigan’s Surveys of Consumers, early December brought an uptick in U.S. consumer confidence, with the Consumer Sentiment Index increasing to 53.3 from 51.0 at the end of November, as quoted on Reuters. However, concerns about elevated prices and labor market conditions linger.

Additionally, the survey highlighted that consumers’ inflation expectations over the next year fell to 4.1% from 4.5% in November, while 5-year expectations eased to 3.2% from 3.4%.

Lower interest rates typically reduce borrowing costs, making it easier for companies to expand their business and increase profitability, which, in turn, boosts economic growth and the stock market.

While some underlying uncertainties remain, the funds mentioned below, with a Zacks ETF Rank #1 (Strong Buy), could be strong options for those looking to capitalize on the current moderate market momentum without taking unnecessary risk.

Prospects of Fed rate cuts are a major boost for the tech sector, which depends on affordable borrowing to fuel its accelerated growth. Lower interest rates create a cost-effective environment for obtaining additional funds to support further initiatives.

At the same time, the market rally remains driven by AI momentum, with the ‘Magnificent Seven’ far outperforming the S&P 500 and contributing most of its gains. This outperformance is highlighted by the performance of the S&P 500 Information Technology Index, which has added 25.37% year to date, much higher than the broader S&P 500’s 16.81% gain over the same period.

Technology Select Sector SPDR ETF seeks to track the performance of the Technology Select Sector Index with a basket of 70 securities. The fund has amassed an asset base of $94.37 billion and charges an annual fee of 0.08%.

XLK has double-digit exposure to NVIDIA NVDA, Apple AAPL and Microsoft MSFT, with allocation of 14.13%, 13.16% and 11.29%, respectively. The fund has a one-month average trading volume of about 10.91 million shares.

Technology Select Sector SPDR ETF has gained 11.49% over the past three months and 25.68% over the past year.

Healthcare has picked up momentum lately, with investors seeking safety amid economic volatility and valuation concerns. Additionally, the increasing adoption of AI in U.S. healthcare continues to provide a meaningful tailwind for the sector. The Dow Jones U.S. Health Care Index has gained 11.83% year to date and 9.80% quarter to date.

Health Care Select Sector SPDR ETF seeks to track the performance of the Health Care Select Sector Index with a basket of 60 securities. The fund has amassed an asset base of $40.39 billion and charges an annual fee of 0.08%.

XLV’s top holdings are Eli Lilly LLY, Johnson & Johnson JNJ and AbbVie ABBV, with an allocation of 14.44%, 8.74% and 7.18%, respectively. The fund has a one-month average trading volume of about 16.48 million shares.

Health Care Select Sector SPDR ETF has gained 3.75% over the past three months and 2.56% year to date.

The anticipated Fed interest rate cut in December is likely to be a key tailwind for the sector and the fund, as this could lower capital costs for banks. Additionally, with signs of regulatory easing, a pickup in credit demand and improving capital market activity, 2026 is increasingly shaping up to be a strong year for the banking sector.

The Dow Jones U.S. Financial Services Index has gained 16.16% year to date and 1.10% month to date.

Financial Select Sector SPDR ETF seeks to track the performance of the Financial Select Sector Index with a basket of 75 securities. The fund has amassed an asset base of $51.58 billion and charges an annual fee of 0.08%.

XLF has top allocations to Berkshire Hathaway Class B BRK.B, JPMorgan Chase & Co. JPM and Visa Class A V, with an exposure of 11.72%, 11.34% and 7.23%, respectively. The fund has a one-month average trading volume of about 44.67 million shares.

Financial Select Sector SPDR ETF has gained 3.2% over the past three months and 20.64% over the past year.

The materials sector, which tends to be the most sensitive to global economic growth expectations, is expected to see smooth trading given the improving global economy. The Dow Jones U.S. Basic Materials Index has gained 10.45% year to date but has fallen 1.46% month to date.

Materials Select Sector SPDR ETF seeks to track the performance of the Materials Select Sector Index with a basket of 26 securities. The fund has amassed an asset base of $5.04 billion and charges an annual fee of 0.08%.

XLB has the highest allocation to Linde PLC LIN, Newmont NEM and SherwinWilliams SHW, with an exposure of 15.27%, 8.04% and 6.27%, respectively. The fund has a one-month average trading volume of about 7.65 million shares.

Materials Select Sector SPDR ETF has gained 2.58% over the past three months and 8.14% year to date.

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Top-Ranked ETFs to Power Your Portfolio Higher

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