The U.S. stock market wrapped up the first half of 2026 on a strong note.The Dow Jones advanced 8.9% during the first six months of the year, marking its best first-half performance since 2021, when it gained 12.7%. The S&P 500 rose 9.6%, while the Nasdaq outperformed with a gain of more than 12%.

Small-cap stocks also enjoyed a standout period. The Russell 2000 jumped nearly 22%, recording its strongest first-half performance since 1991, as quoted on CNBC.

Volatile Start Gives Way to a Powerful Recovery

The first half of the year was marked by significant volatility. Markets reached record highs despite sharp fluctuations in energy prices caused by the Iran conflict and ongoing concerns about whether AI-related spending could remain sustainable.

However, solid U.S. corporate earnings remained the key market driver. Total S&P 500 earnings are expected to increase by 23.7% in the June quarter of 2026 from the same period last year, on 11.4% higher revenues.

America-Focused ETFs Showing Fireworks

While there are winners in many corners of the market, we have highlighted a few themes and ETFs that have been seeing fireworks lately. These areas are purely American investment stories.

The Great American Reshoring Wave Gains Momentum

The U.S. manufacturing sector remains in expansion territory in 2026, even after easing from a four-year high reached earlier this year. Fourteen manufacturing industries reported growth in June, highlighting resilience despite inflation and geopolitical uncertainties, per Reuters.

The ISM said its manufacturing PMI slipped to 53.3 last month from 54.0 in May, which ???was the highest reading since May 2022, as per the same Reuters article. Still, manufacturing has grown for six successive months as the AI spending spree has helped offset some of the hit to factories from the conflict.

Major investment announcements include Apple's $600 billion U.S. investment program, NVIDIA's commitment to build AI chips and infrastructure domestically and large pharmaceutical manufacturing projects from Johnson & Johnson and other firms.

In this context, investors should focus on the likes of First Trust RBA American Industrial Renaissance ETF AIRR and State Street Industrial Select Sector SPDR ETF XLI. AIRR is up 55% and XLI has gained about 24% over the past year.

America's AI Leadership

The AI revolution continues to reshape the U.S. economy. Federal AI spending remains heavily concentrated in defense and innovation programs, while private-sector investment in data centers and computing infrastructure is accelerating rapidly.

iShares Semiconductor ETF SOXX offers exposure to leading chipmakers and equipment providers benefiting from AI infrastructure spending. VanEck Semiconductor ETF SMH remains one of the most popular ways to gain exposure to AI-driven semiconductor leaders. SOXX has surged about 147% while SMH has jumped about 120% over the past year.

Defense and Aerospace: Another Pillar of American Leadership

The defense and aerospace sector is a strategic area of national strength for any country. Rising geopolitical tensions, higher military budgets, and growing investments in next-generation systems support long-term growth prospects.

The convergence of AI, autonomous systems, cybersecurity, and space technologies is further strengthening the sector's investment case. iShares U.S. Aerospace & Defense ETF ITA thus hogs attention. The ETF is up about 30% over the past year.

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State Street Industrial Select Sector SPDR ETF (XLI): ETF Research Reports

VanEck Semiconductor ETF (SMH): ETF Research Reports

iShares Semiconductor ETF (SOXX): ETF Research Reports

iShares U.S. Aerospace & Defense ETF (ITA): ETF Research Reports

First Trust RBA American Industrial Renaissance ETF (AIRR): ETF Research Reports

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research