Three ETFs to Watch Ahead of Possible July Rally

Wall Street is entering July with a more bullish tone as strategists point to seasonality, stronger second-quarter earnings and renewed interest in artificial intelligence. They highlight three exchange-traded funds — Vanguard S&P 500 ETF (VOO), iShares Semiconductor ETF (SOXX) and Invesco QQQ — as ways to position for a possible rally.

Wells Fargo wrote in a strategy note led by Ohsung Kwon that it expects a “strong summer rally ahead,” citing improving investor positioning, delayed AI-related IPOs and projected second-quarter EPS growth of 22%, up from 19% in the first quarter. The bank estimated about $36 billion in tariff refunds have been processed with as much as $90 billion potentially still to come, and noted consumer staples and industrials could benefit. Wells Fargo added that the first half of July has historically been a strong period for the S&P 500, with an average gain of 1.35% over the past century.

For broad-market exposure, strategists pointed to Vanguard S&P 500 ETF (VOO). The fund tracks the S&P 500, carries a 0.03% fee and recently passed $1 trillion in assets. VOO would reflect a broad earnings lift tied to tariff refunds or seasonal strength without requiring a sector-specific bet.

Investors focused on AI and the chip cycle may prefer iShares Semiconductor ETF (SOXX). The fund tracks U.S.-listed semiconductor companies across the chip supply chain, held about 30 names as of June 30 and has a 0.34% expense ratio. Ben Snider, chief U.S. equity strategist at Goldman Sachs Research, wrote that “AI-related investment is expected to drive roughly 40% of S&P 500 EPS growth this year.” Goldman projected the largest cloud infrastructure companies will spend about $670 billion in 2026 after recent upward revisions to capital expenditure estimates.

If gains concentrate in mega-cap technology, cloud platforms and dominant growth names, Invesco QQQ could provide more concentrated exposure. QQQ tracks the Nasdaq-100 and charges a 0.18% fee, giving investors direct access to the largest growth and AI leaders.

Strategists flagged risks. Goldman noted market breadth has tightened to one of its narrowest readings since the dotcom era and that near-term price swings are likely to follow geopolitical developments. Charles Schwab strategists Liz Ann Sonders and Kevin Gordon wrote that earnings are supporting the current bull market while leadership remains narrow and concentrated in AI and energy-related sectors; they warned that stretched positioning and pressure from bond yields could leave markets vulnerable to disappointment.

Investors weighing these ETF options must consider trade-offs: VOO for diversified exposure, SOXX for a targeted semiconductor bet and QQQ for concentrated big-tech exposure. Each fund offers a different way to participate in seasonality, earnings trends, potential tariff refunds and renewed AI spending in July.