Less than three weeks since the sharp drop at the beginning of the month, the US stocks have once again demonstrated their strong resilience - the S&P and Nasdaq are about to return to historical highs.$NVIDIA (NVDA.US)$Leading technology stocks hit the bottom and rebounded, leading the Nasdaq to break through the retracement range at a record speed.

Tech giants continue to be the driving force behind the rebound in US stocks. According to statistics, the market cap of the seven giants has rebounded by over 1.4 trillion USD since August 5th, almost half of the 3.2 trillion USD market cap increase in the same period.$S&P 500 Index (.SPX.US)$Among them, NVIDIA has contributed approximately 7% of the increase directly.

Although the U.S. stock market is flourishing, there are still some interesting signs worth noting. Leaving aside the well-known technology stocks, some long-neglected industries seem to be quietly making a fortune.

Are there flowers blooming everywhere in the American stock market? Defensive stocks rarely outperform technology stocks.

Data shows that in the past month, the defensive stock sectors of utilities, daily consumption, and healthcare have rarely outperformed the information technology sector, recording significant gains. All three sectors are at their 52-week highs.

In addition, many stocks in the industry have also performed remarkably well. Among the stocks with a market value of hundreds of billions, $Eli Lilly and Co (LLY.US)$,$Thermo Fisher Scientific (TMO.US)$,$AbbVie (ABBV.US)$,$Regeneron Pharmaceuticals (REGN.US)$Major pharmaceutical giants are showing strong momentum.

It is worth noting that a key indicator, the S&P 500 Equal Weight Index, reached a new all-time high on Monday. This index is an important measure of market concentration.

Robert Pavlik, Senior Portfolio Manager at Dakota Wealth Management, commented: "This indicates that the market rebound is expanding. After the significant rise of the 'Big Seven' earlier this year, investors seem to be looking for opportunities in other sectors of the market."

The historically high market concentration in US stocks has long been a concern. Now, it is pleasing to see that multiple sectors are flourishing. It is widely believed that broader profit growth is a good thing, as it provides more opportunities for investors instead of being limited to just a few technology stocks. This will bring balance to the market and make it more likely for investors to shift from large-cap stocks to smaller stocks with higher growth potential and stocks that have previously lagged behind in performance.

From a long-term perspective, in order for the S&P 500 to continue reaching new highs, it also needs more stocks to provide upward momentum. Ryan Detrick from Carson Group said, "The stock market is no longer solely dependent on technology stocks. Seeing these more cyclical sectors show leadership is a good sign for investors."

Who will lead the next wave of gains in the US stock market?

According to HSBC's report, as of the 19th, about 91% of S&P companies have announced their second-quarter earnings, with earnings per share growth rate reaching the highest level since 2022. Among them, 78% of the companies exceeded earnings per share expectations and were higher than the average level of the past five years.

Looking at different industries, the finance and utilities sectors have a large number of companies with year-on-year earnings per share growth rates exceeding 10%, far surpassing the IT industry. The report suggests that with the expansion of profit growth, it is expected that the stock market gains in various sectors will become more balanced in the future.

Craig Sterling, the head of stock research at Amundi US, believes that in the coming months, technology stocks will not be the only winners. He believes that if the US can avoid an economic recession, by next year, the profit growth of the seven giants will begin to slow down, while the profit growth of S&P companies other than the seven giants will rebound.

When the technology sector is no longer the only dominant force, which sectors may help the overall market continue to rise? Perhaps the following sectors have opportunities:

• Utilities

Utility companies provide basic services such as electricity, natural gas, and water, with relatively inelastic demand. According to Morningstar, almost all utility companies are expected to have profit growth of at least 6% per year. The industry's 3.6% yield is competitive compared to interest rates.

In the context of a rate-cutting cycle, utility companies' dividends will continue to increase. The combination of dividend yield and investment opportunities in renewable energy, AI data centers, and grid infrastructure makes the risk-return ratio of these stocks more attractive.

According to data, in the first half of 2019, the global LCD TV panel shipment scale was 0.14 billion pieces, a year-on-year increase of 3.6%, but the growth rate was lower than the panel capacity growth rate. It is expected that the annual growth rate of shipment area in 2019 will only be 2.9%, which is a small decline compared to the previous year's growth rate of 5%. In addition, the TV unit shipment volume was 0.11 billion units, a slight decrease of 0.4% year-on-year and a decrease of 19.1% month-on-month. Based on the above, due to oversupply and sluggish downstream demand, the shipment growth rate is lower than the panel capacity growth rate. The LCD market has now entered a stock stage and channels and brand factories have high inventory.$Utilities Select Sector SPDR Fund (XLU.US)$It has risen 8.51% since July, significantly outperforming the S&P 500 index and the Nasdaq.

In addition, the utilities sector provides a large investment exposure to strong blue-chip utility companies with robust balance sheets, such as$Southern (SO.US)$,$Duke Energy (DUK.US)$,$Sempra Energy (SRE.US)$,$American Electric Power (AEP.US)$And.$Dominion Resources (D.US)$.

• Consumer staples.

Everyday items are often less affected by sales during periods of economic prosperity and economic downturns, with these companies typically being recession-resistant. With increasing economic uncertainty, this sector may provide strong relative performance in the future. In addition, among essential consumer goods, retailers with lower-priced private label brands often have more pricing power due to demand stickiness, thus also having a stronger fundamental outlook.

In terms of scale, the largest essential consumer goods ETF is $Consumer Staples Select Sector SPDR Fund (XLP.US)$ with its tracking index being the 'Consumer Staples Select Sector Index', which selects primarily from the US large enterprises in the S&P 500 that invest in essential consumer goods such as beverages, food, tobacco, household and personal care products.

Many stocks in the essential consumer goods sector have already 'taken the lead', with the stock price of beverage giant coca-cola (KO.US) hitting a historic high overnight, rising nearly 20% year-to-date; while essential retailer $Walmart (WMT.US)$ has shown even stronger momentum, with a gain of over 44% year-to-date, also hitting a new high on Wednesday, and its market cap has now exceeded 600 billion US dollars; another retail giant $Costco (COST.US)$ Similarly, it has performed well and risen over 34% year to date.

• The medical care sector usually outperforms the overall market during economic downturns due to its low correlation with economic cycles. For example, in the global economic recession of 2009, the pharmaceutical and biotechnology industries had steady performance and limited impact on sales and profits.

The healthcare sector typically outperforms the broader market during economic downturns due to its low correlation with the economic cycle. The demand for healthcare products and services remains strong despite the presence of various external variables. Additionally, most biopharmaceutical companies have high gross margins, with potential gross margins of over 95% for their flagship drugs, reducing the impact of inflation.

What's more, with the trend towards easing interest rates, the cost of capital has decreased, leading to increased investment in pharmaceutical capital expenditure.

Comparatively popular and large-scale healthcare ETFs. $The Health Care Select Sector SPDR® Fund (XLV.US)$Please use your Futubull account to access the feature.$Vanguard Health Care ETF (VHT.US)$ Both have recorded good gains this year, with both up more than 14%.

Mooer, do you think tech stocks will continue to soar?

Which industry will lead the new surge in US stocks?

Let's discuss in the comments section!

Editor/Emily