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The third-quarter 2023 earnings season will kick off this week, with the banking sector slated to report numbers. There has been a notable improvement in the earnings outlook in recent months, with positive revisions for several key sectors since the start of Q3 helping to offset continued pressure on estimates.

Total S&P 500 earnings are expected to be down 2% from the same period last year on 0.6% lower revenues, per the latest Earnings Trends. This would represent the fourth consecutive quarter of earnings declines and follow declines of 7.1% in the second quarter, 3.4% in the first quarter, and 5.4% in the fourth quarter of 2022. Estimates have come down about 0.1% since the start of the period. Six sectors, including the Tech sector, have seen a rise in estimates.

Of the 16 Zacks sectors, eight are expected to post earnings growth in the third quarter, with the strongest gains in the Aerospace (57.2%) sector. This would be followed by Consumer Discretionary (41.1%), Retail (13.1%), Technology (11%), and Utilities (6.3%).

Given this, we have highlighted one ETF from each of the mentioned sectors that could make great plays as the earnings season unfolds. These ETFs have a favorable Zacks ETF Rank of #1 (Strong Buy), #2 (Buy) or #3 (Hold).

Aerospace: iShares U.S. Aerospace & Defense ETF (ITA - Free Report)

This 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 $5 billion and an expense ratio of 0.40%.

The ETF trades in an average daily volume of around 461,000 shares. It has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

Consumer Discretionary: Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)

This fund is the largest and most popular product in this space, with AUM of $16.7 billion and an average daily volume of around 4.7 million shares. It offers exposure to the broad consumer discretionary space, and it tracks the Consumer Discretionary Select Sector Index.

The fund holds 52 securities in its basket, with key holdings in Automobiles, Broadline Retail, Hotels, Restaurants & Leisure, and Specialty Retail, with a double-digit allocation in each. The fund charges 0.10% in expense ratio, and it has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.

Retail: SPDR S&P Retail ETF (XRT - Free Report)

This ETF tracks the S&P Retail Select Industry Index, which provides exposure across large-, mid- and small-cap stocks. It holds a well-diversified basket of 78 stocks, with none making up for more than 1.7% share. The ETF is well spread across various industries, with a double-digit allocation in apparel retail, specialty retail, automotive retail, and broadline retail.

The ETF is the largest and most popular in the retail space, with AUM of $408.2 million and an average trading volume of 5.6 million shares. It charges 35 bps in annual fees, and it has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.

Technology: iShares US Technology ETF (IYW - Free Report)

This ETF tracks the Russell 1000 Technology RIC 22.5/45 Capped Index, giving investors exposure to 135 U.S. electronics, computer software and hardware, and informational technology companies. Software & Services takes the largest share at 40.8%, followed by 21.8% for Semiconductors & Semiconductor Equipment, 20.8% for Tech Hardware & Equipment, and 15.1% for Media & Entertainment.

The ETF has AUM of $11.2 billion, and it charges 40 bps in fees and expenses. Volume is typically good, as it exchanges approximately 493,000 shares a day. The ETF has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.

Utilities: Vanguard Utilities ETF (VPU - Free Report)

This ETF follows the MSCI US Investable Market Utilities 25/50 Index, holding 65 securities in its basket, with none accounting for more than 13.1% share. More than half of the portfolio is allocated to electric utilities, closely followed by multi utilities (26.1%).

The ETF charges 10 bps in annual fees, and it sees a good volume of around 273,000 shares on average. It has AUM of $4.6 billion and a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

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