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The year 2022 has been brutal for the stock market due to soaring inflation and the Federal Reserve’s aggressive interest rate hikes. The S&P 500 Index is down 19.7% this year — the benchmark’s first double-digit percentage loss since 2008, when it slid 36.6% during the global financial crisis, according to Dow Jones Market Data. The Dow Jones Industrial Average has declined 8.5% while the tech-heavy Nasdaq Composite Index plunged the most by 33.8%.

While most segments of the market are suffering from huge losses, with technology bearing the maximum brunt, the energy sector has been the outperformer, followed by metal miners and many others. As such, VanEck Vectors Oil Services ETF (OIH - Free Report), FlexShares Morningstar Global Upstream Natural Resources Index Fund (GUNR - Free Report), VanEck Vectors Steel ETF (SLX - Free Report), iShares U.S. Insurance ETF (IAK - Free Report) and iShares U.S. Aerospace & Defense ETF (ITA - Free Report) have gained in double digits. These are likely to continue outperforming into the New Year should the trends prevail.

The Federal Reserve has been on an aggressive tightening policy to fight the skyrocketing inflation. The central bank has raised its interest rate by 475 bps this year in the fastest hikes since the 1980s. The aggressive approach has stoked worries of a recession, with top executives of major U.S. financial institutions, including JPMorgan, BlackRock, and Citi, forecasting a likely economic downturn in 2023.

The consumer price index jumped 7.1% year over year in November, down from a 7.7% year-over-year increase in October and a recent peak of 9.1% in June. This represents the lowest annual increase since late 2021. Further, Americans have regained confidence in the U.S. economy, with consumer confidence bouncing back in December and reversing consecutive declines in October and November to reach its highest level since April, per the University of Michigan's Consumer Confidence Index. The Conference Board Consumer Confidence Index also climbed to 108.3 from 101.4 in November.

Additionally, the latest bouts of data indicate an improving economy. The economy added 263,000 jobs in November, marking another strong month of job growth. The unemployment rate remained at 3.7%, close to a 50-year low, while average hourly earnings jumped 0.6% from the prior month and 5.1% from the year-ago month. Meanwhile, business activity jumped the most in November since March 2021, suggesting that the largest part of the economy remains resilient. ISM’s gauge of services rose to 56.5 last month from 54.4 in October.

VanEck Vectors Oil Services ETF (OIH) – Up 66%

VanEck Vectors Oil Services ETF tracks the MVIS U.S. Listed Oil Services 25 Index, which offers exposure to companies involved in oil services to the upstream oil sector, including oil equipment, oil services or oil drilling. It holds 25 stocks in its basket, with a higher concentration on the top two firms.

With AUM of $2.5 billion, VanEck Vectors Oil Services ETF charges 35 bps in annual fees. It trades in an average daily volume of 839,000 shares and has a Zacks ETF Rank #2 (Buy) with a High risk outlook.

FlexShares Morningstar Global Upstream Natural Resources Index Fund (GUNR) – Up 16.5%

FlexShares Morningstar Global Upstream Natural Resources Index Fund offers global exposure to natural resource sectors by tracking the Morningstar Global Upstream Natural Resources Index. It provides balanced exposure to three traditional (agriculture, metal and energy) and two non-traditional (water and timber) natural resource sectors.

FlexShares Morningstar Global Upstream Natural Resources Index Fund has amassed $7.3 billion in its asset base and charges 46 bps in annual fees. It trades in an average volume of 931,000 shares per day.

VanEck Vectors Steel ETF (SLX) – Up 16.5%

VanEck Vectors Steel ETF provides a pure-play exposure to a small basket of 26 stocks in the steel sector. It tracks the NYSE Arca Steel Index. American firms dominate the fund’s returns at 46.5%, followed by Brazil (20.9%) and Australia (11.7%).

VanEck Vectors Steel ETF has amassed $106.5 million in its asset base and charges 55 bps in fees from investors. It trades in a moderate volume of 40,000 shares a day on average.

iShares U.S. Insurance ETF (IAK) – Up 12%

With AUM of $555 million, iShares U.S. Insurance ETF offers exposure to U.S. companies that provide life, property and casualty, and full-line insurance. It tracks the Dow Jones U.S. Select Insurance Index and holds 56 securities in its basket.

Property & casualty insurance accounts for the largest share at 57.1%, while life & health insurance and multiline insurance round off the next two spots with double-digit exposure each. iShares U.S. Insurance ETF charges 39 basis points in annual fees and trades in an average daily volume of 80,000 shares. It has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.

iShares U.S. Aerospace & Defense ETF (ITA) – Up 9.3%

iShares U.S. Aerospace & Defense ETF provides exposure to U.S. companies that manufacture commercial and military aircraft and other defense equipment by tracking the Dow Jones U.S. Select Aerospace & Defense Index. It holds 33 stocks in its basket with AUM of $4.5 billion and an expense ratio of 0.39%.

iShares U.S. Aerospace & Defense ETF trades in an average daily volume of around 495,000 shares. It has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

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