Midyear can be an ideal opportunity for investors to re-evaluate their portfolios and consider rebalancing to align with their ideal asset allocation. As the midpoint of 2025 passes, the U.S. stock market has delivered a mixed bag of performance across sectors, driven largely by continued enthusiasm for artificial intelligence (AI) and fluctuating economic conditions.
See more: Building a Diversified Portfolio With Fidelity ETFs: A Step-by-Step Guide
While broader market indexes have seen impressive gains, a closer look reveals significant disparities in sector-level returns, highlighting areas of strong growth and notable underperformance.
The Standouts: AI & Digital Demand Fuel Top Performers
Leading the charge this year have been industrials, information technology, and utilities. The strong demand for AI-related technologies, digital advertising revenues, and robust consumer spending have been key catalysts.
Giants like Nvidia, for example, a major player in the semiconductor space crucial for AI development, have seen their stock prices soar, pushing the information technology sector to remarkable heights.
Even more notably, the industrials sector has proven to be an exceptional performer in 2025 to date. The massive build-out of AI-driven data centers and significant investments in crucial power infrastructure have directly translated into strong growth for companies within this sector.
Utilities stocks have also performed well during the first seven months of the year. The increasing electricity demand from energy-intensive AI data centers has provided a boost to this traditionally stable, but slower-growing, sector.
Investors can get focused exposure to these sectors via the Fidelity MSCI Industrial Index ETF (FIDU ), the Fidelity MSCI Information Technology Index ETF (FTEC ), and the Fidelity MSCI Utilities Index ETF (FUTY ).
The Laggards: Economic Headwinds & Sector-Specific Challenges
On the other side of the spectrum, some sectors have struggled to keep pace with the broader market rally. Health care has consistently been among the weakest performers. Although generally considered defensive, various factors have impacted the sector. These include regulatory uncertainties and company-specific challenges.
Despite containing large and profitable insurance providers and drugmakers, the sector’s valuation has come under scrutiny, particularly for high-growth biotech firms with inconsistent earnings.
However, for investors with conviction in a trend reversal, now could potentially be an opportune time to add exposure to the health care sector with the Fidelity MSCI Health Care Index ETF (FHLC ).
As we move deeper into the second half of the year, investors will be closely watching how these sector trends evolve, as the market landscape continues to shift.
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