It’s been slow-going for the S&P 500 as summer winds down.
After a record-breaking rally that followed the sell-off in April, gains in the benchmark index have stalled. The S&P 500 ended Wednesday at 6,395 — just 3% higher than its closing price on June 30.
But there are a handful of areas that have rocketed higher and beaten the index so far in the quarter, Ned Davis Research flagged in a note to clients this week.
The firm highlighted five areas that have “surprised” with their strong performance.
“All five themes have near-term catalysts that could make them attractive at least as short-term trades and we keep them on our radar,” the researchers said.
Here are the areas the firm is eyeing for their market-beating gains:
AdvisorsShares Pure US Cannabis ETF (MSOS): up 66% since June 30
Long-term outlook: “The theme is intertwined with politics, but marijuana remains illegal under federal law. The industry still struggles with profitability, keeping us skeptical of the theme,” NDR said.
US Global Jets ETF (JETS): Up 8% since June 30
Airline earnings have held up, despite a weakening outlook for consumer spending. Delta, United Airlines, and American Airlines all beat earnings estimates for the second quarter, making those stocks the top contributors to the ETF’s performance, NDR analysts said.
Long-term outlook: “JETS has climbed back to its January 2025 resistance level. We remain skeptical of the rally’s durability as services inflation ticks higher and a weakening labor market should dent demand,” the firm added.
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3. Lithium and battery stocks
Global X Lithium & Battery Technology ETF (LIT): Up 17% since June 30
CATL, one of the world’s largest battery makers, said it shut down operations in its China’s Jianxiawo lithium mine for at least three months due to permit issues, Bloomberg reported. That’s offering hope of a “better supply/demand” balance in the lithium market, NDR said, which could raise prices.
Long-term outlook: “The Jianxiawo mine closing is a good step for less lithium supply from China and Albermarle has also indicated slowing capex, but we remain skeptical and need more proof of capital discipline,” the firm added.
Invesco Solar ETF (TAN): Up 15% from June 30
Solar regulation in Trump’s One Big Beautiful Bill was more lax than expected.
The bill will phase out solar energy tax credits through 2027, but the IRS’s four-year safe harbor rule is a potential loophole that could allow businesses to claim tax credits in a longer window, NDR said.
Long-term outlook: “OBBBA rules create an incentive to start solar projects after Sep. 2. Still, tariffs on Chinese solar panels have driven up prices and hurt demand. Solar could be attractive as a short-term trade,” researchers wrote.
iShares US Home Construction (ITB): Up 14% since June 30
Long-term outlook: “We remain long-term bullish on housing and believe there is pent-up demand, but affordability remains an issue. We may upgrade ITB when we have better visibility on affordability,” researchers said.