Although several sectors have notched strong third-quarter performance, the ones listed below are among the standouts. For more stories on sector ETFs, visit our sector ETF category.:

1. Technology. Apple (Nasdaq: AAPL) is the latest big tech name to post strong earnings. The maker of the popular iPhone posted a 47% gain in profit, taking investors and analysts by surprise. Shares were up 5.4% as of Tuesday, reports Jessica Mintz for the Associated Press.

Other technology companies posted strong earnings, as well. (Read about them here).

• Technology Select Sector SPDR (NYSEArca: XLK): up 40.3% year-to-date; Apple 8.1%

• FirstTrust NASDAQ -100 Tech Index (NYSEArca: QTEC): up 67.6% year-to-date; Apple 2.7%

2. Pharmaceuticals. The sector came out a winner in the health care bill that went through the finance committee last week. Pfizer (NYSE: PFE) reported a 26% higher profit, but lower sales. The world’s largest drug maker posted net income of $2.88 billion, or 43 cents a share, even as many patents have been expiring, reports Val Kennedy for MarketWatch.

• iShares Dow Jones U.S. Healthcare (NYSEArca: IYH): up 14.2% year-to-date; Pfizer is 10.6%

• Vanguard Health Care (NYSEArca: VHT): up 15.3% year-to-date; Pfizer is  7.5%

3. Fast Food. McDonald’s (NYSE: MCD) and Yum Brands (NYSE: YUM) have weathered the recession nicely, as price-aware consumers stop going out to sit-down restaurants. Yum Brands has continues to thrive; its third-quarter earnings rose 18% thanks to lower costs that helped the company earn a profit in both the United States and China. McDonald’s announces earnings on Thursday.

• PowerShares Dynamic Food And Beverage (NYSEArca: PBJ): up 10.8% year-to-date; Yum 4.7%; McDonald’s 4.5%

The U.S. Senate Finance Committee approved its version of legislation to overhaul the nation’s $2.5 trillion health care system.

Matt Phillips for The Wall Street Journal reports that following the official vote moving the bill out of the committee, health shares moved even lower. Unfortunately, the S&P Health Care Sector index is the worst-performing segment of the S&P 500, knocking the financial sector off from the top position. (Read why health care ETFs still have appeal).

Health insurers took the biggest decline after the vote, which pharmaceuticals close behind. The Standard & Poor’s pharmaceutical index is down 1.5%, outpacing the declines in the health care index and the S&P 500.

Leslie Gevirtz for Reuters says there are both winners and losers in the current bill.

Winners:

• Drugmakers/Pharmaceuticals. The pharmaceutical sector managed to keep an $80 billion rebate agreement while also successfully heading off a fight that would have required some of its largest players to give back another $106 billion in additional rebates over 10 years. Pharmaceuticals can be played with the PowerShares Dynamic Pharmaceuticals (NYSEArca: PJP), which is up 9.7% year-to-date.

• Hospitals. Hospitals kept intact a $155 billion, 10-year deal to accept lower payments from Medicare and Medicaid. Some hospitals can be found in the iShares Dow Jones U.S. Healthcare Providers (NYSEArca: IHF), which is up 18.9% year-to-date.

Losers:

• Health Insurers: While the industry successfully fought amendments for a government-run program, it still faces more than $6 billion in yearly fees. Vanguard Health Care (NYSEArca: VHT) is up 12.3% year-t0-date.

• Device makers: Device makers are facing a $4 billion yearly fee, although analysts feel that this feel could be reduced. iShares Dow Jones Medical Devices (NYSEArca: IHI) is up 29.9% year-to-date.

For more stories about health care, visit our health care category.

For a majority of companies, third-quarter results could be below those of 2008, with per-share profits for the S&P 500 at a projected drop of 15.4%. More than 340 businesses could see a year-over-year drop in profits, according to Zacks. Projected revenues show median company sales may drop 7.2%, with more than 360 companies expected to experience a year-over-year drop in earnings.

There are a lucky few that are forecasting actual earnings growth compared to last year:

Homebuilders. First off, conditions were already deteriorating and mortgages were hard to come by last year. Secondly, more new and existing home sales translates to a more stable housing market.

• SPDR S&P Homebuilders (NYSEArca: XHB): up 35.4% year-to-date

Insurance. Insurance companies can potentially pull off double-digit growth. Some firms can bounce back higher from prior-year losses while others may see true growth. Property and causality insurers have been sparred by a calm hurricane season so far, and most insurers benefited from a recovering financial market.

• KBW Insurance (NYSEArca: KIE): up 33.2% year-to-date

Health Care. The medical sector is still raking in the profits. The sector is not correlated to commodity prices and is less economically sensitive. The result is that medical companies are showing both revenues and earnings growth this quarter.

• Vanguard Health Care (NYSEArca: VHT): up 12.7% year-to-date

On the flip side, here are a few sectors that could report contractions:

Commodity. Commodity-related companies reported strong profits last year and as a result, energy and metals companies may show drops in third-quarter profits this year.

• iShares Dow Jones U.S. Oil & Gas Ex Index (NYSEArca: IEO): up 33.8% year-to-date

• PowerShares DB Base Metals (NYSEArca: DBB): up 53.7% year-to-date

Banks. Many banks still remain unprofitable. High joblessness, high level of foreclosures and poor real estate market all affect banks. The result is a projected report of losses for the sector.

• iShares Dow Jones U.S. Financial Sector Index Fund (NYSEArca: IYF): up 20.1% year-to-date

Max Chen contributed to this article.

Health care reform has been centered around the passage of a “public health care option” which ultimately means that Americans would have the right to choose whether they want public health insurance.

Khronostock on Daily markets reports that having the public health insurance option means that Americans would have a choice of keeping the health insurance they currently have, buying health insurance from one of the many private health insurance companies, or choosing a public health insurance plan.

The so-called August offensive is launched by the Democrats against the insurance industry, as Republicans remain opposed to the proposed health care overhaul. The main message of the campaign is that by making over the health care system, consumers will be protected against unscrupulous health care practices, such as refusing patients with pre-existing conditions, reports Sheryl Gay Stolberg and David M. Herzenhorn for The New York Times.

President Barack Obama’s plan involves a  government-run health insurance plan that will compete with the private sector, but in the meantime, should not hurt those who are already insured.

Wherever health care goes, be sure to watch the trend lines for signs of any potential long-term uptrend (or vice versa).

• iShares Dow Jones U.S. Healthcare Sector (IYH): up 7.8% year-to-date

• Vanguard Health Care (VHT): up 7.8% year-to-date

• Health Care Select Sector (XLV): up 7% year-to-date

For more stories about health care, visit our health care category.

A health care makeover under $1 trillion and ensuring that it is universal will be no easy feat for the federal government. Janet Adamy for The Wall Street Journal reports that the Congressional Budget Office said this week that one Senate proposal, when combined with certain expansions to the Medicaid program, would cost about $1.1 trillion over a decade and still leave 15 million to 20 million Americans uninsured in 2019.

The trick for the White House is to make sure that emphasizing that the plan won’t increase the deficit — meaning savings must be found for every dollar spent. The Obama administration is seeking aid from both pharmaceutical and hospital concessions.

Ceci Connelly and Michael D. Shear for The Washington Post report that no single development appeared likely to kill Obama’s signature domestic agenda item, but the constant  challenges has taken the creation of a government-sponsored health care program down to the “negotiable” level.

Nonetheless, health care is the one of the few sectors up in the last month:

• Health Care Select Sector SPDR (XLV): up 2% for one month

• Vanguard Health Care (VHT): up 1.4% for one month

For more stories about health care, visit our health care category.

On June 17, Democratic leaders in Congress began to push for a measure that will require all Americans to get medical insurance, forcing insurers to accept all patients and ending tax breaks for employer-paid health benefits, report Nicole Gaouette and Laura Litvan for Bloomberg. President Barack Obama has pressed the need for a health-care overhaul as a top domestic priority and said it’s a “moral imperative” to extend coverage to the 46 million Americans who are uninsured.

According to the White House Council of Economic Advisers, health care makes up 18% of the U.S. economy and may increase to 34% by 2040.

Republicans and others are wary of the price tag of $1.6 trillion over 10 years and whether a new government-run insurance program will be created to compete with private insurers, according to Reuters.

Rising health care costs decrease the competitiveness of U.S. insurance companies, strain state and federal budgets and eat away at consumer wealth. The U.S. spends around $2.5 trillion on health care annually and is still behind other developed nations on many public health measures.

Back in March, health care companies considered Obama’s overhaul a potential profit-killer and investors shared the same assumption as they dumped shares, remarks Kevin Baker for TheStreet. As the government increases taxes and takes money from Medicare to pay for a government-sponsored health program, the “Medicare for All” system may put pressure on many insurance companies.

Health care ETFs are made up of a variety of health-related companies, and this includes insurers for some of them. If the moves strain insurance companies, could we see a shift in the indexes for such funds?

• iShares Dow Jones U.S. Healthcare Provider (IHF): up 2.1% year-to-date

• Rydex S&P Equal Weight Health Care (RYH): up 7.5% year-to-date

• First Trust Health Care AlphaDEX (FXH): up 9.2% year-to-date

• PowerShares Dynamic Healthcare (PTH): down 5.2% year-to-date

• Vanguard Health Care ETF (VHT): down 2% year-to-date

For more information on health care, visit our health care category.

Read the disclaimer, as Tom Lydon is a board member of the Rydex Funds.

Max Chen contributed to this article.

In turn, companies that are cutting costs do so at the health care expense of their employees. Employers’ contribution to their employees’ monthly insurance premiums rose by 5.4% during the past year, while employees’ contributions surged 14.7%.  Double-digit increases have occurred for three years straight.

The Obama administration needs to tackle this issue before the year’s end, as 2009 has presented the worst year yet for health care costs.

• iShares Dow Jones U.S. Healthcare Sector Index Fund (IYH): down 3.9% year-to-date



• Vanguard Health Care Fund (VHT): down 3.8% year-to-date

President Barack Obama’s plan comes with a 10-year price tag of an estimated $634 billion, and he wants to enact it without boosting the budget deficit, reports Brian Faler for Bloomberg. Industry groups are gathering and have pledged to slow projected spending growth by $2 trillion over the next decades, but some are skeptical that the savings will ever materialize.

General Electric (GE) has been invited to Washington to unveil plans. They will unveil GE’s new efforts to improve “sustainability of global healthcare systems” involving health technology, independent living, rural health and cost containment, says Paul Glader for The Wall Street Journal.

GE is aiming at improving access to quality health care, while lowering costs, and developing products and marketing them inline with sustainability. The company is trying to benefit from a business standpoint in an effort to gain from the White House, and Obama’s benefit priorities.

The new initiative is likely to involve a deeper push by GE into information technology for health care, such as electronic medical records. The IT will help hospitals and doctors monitor progress and medical records on a paperless level.

• Vanguard Health Care (VHT): down 3.5% year-to-date

• Health Care SPDR (XLV): down 4.7% year-to-date

This bear market has been an exceptional one, and equity investors are left with virtually no place to hide out. Stocks are still in dangerous territory, as recent performance of the S&P 500 has proved. Investment News believes that for those investors who are reluctant to give up equities altogether, there are opportunities within health care-related ETFs.

Health care has generally been viewed as a defensive sector, meaning that health care sector stocks have held up better than the overall stock market during major bear markets. The current bear market is no exception. People are just not going to stop needing health care, and the majority are not going to go without decent coverage. For this reason alone, many profits within this sector remain.

Of the dozen or so U.S.-based health care ETFs, the performance is has been equal over the past three and five years. Also, what the health care industry and ETFs have going for them is a solid population of aging baby boomers in the United States.

• iShares Dow Jones U.S. Health Care Sector Index Fund (IYH): down 7.8% year-to-date

• Vanguard Health Care (VHT): down 7.5% year-to-date

In the last few years, health care stocks have performed relatively the same as their related ETF in the S&P, Health Care Select Sector SPDR (XLV), writes Ron DeLegge for ETF Guide.

Now, the sector is seeing increased activity with mergers and takeovers, and more buyout deals could be on the way. Health care stocks also have pretty enticing valuations with current P/E ratios of around or below 10 compared to the S&P 500’s 11.9 multiple. Watch the trend lines, though:  most of these funds are close to their short-term trend lines, and none have crossed their 200-days.

Interested in health care ETFs but don’t know of any? Well here are a couple for you to ponder over:

• iShares Dow Jones U.S. Healthcare Sector Index Fund (IYH): down 8.6% year-to-date. The ETF is based on the Dow Jones Index and has 139 health care stocks. Stocks of companies are selected passively and weighted to their market capitalization or size, the medium size is just over $2 billion.

• Health Care Select Sector SPDR (XLV): down 10% year-to-date. It is made of health care stocks within the S&P 500. It is the largest health care ETF with around $2 billion in assets. Companies included deal in health care equipment and supplies, health care providers and services, biotechnology and pharmaceuticals. The health care sector, the second largest of the sectors,  is around 15% of the S&P 500’s overall sector weighting.

• Vanguard Healthcare ETF (VHT): down 9% year-to-date. VHT tries to mirror the MSCI US Investable Market Health Care Index. The ETF contains 297 holdings, each with a median market size of around $45 billion, and it is seen as the most diversified of the available health care ETFs.

• Rydex S&P Equal Weight Health Care ETF (RYH): down 5.4% year-to-date. RYH follows S&P 500 health care stocks, but it weights each stock equally. This usually causes a bias toward mid- and small-company stocks.

• PowerShares Dynamic Healthcare Sector Portfolio (PTH): down 11.1% year-to-date. PTH may be more useful for a portfolio strategy. It tries to outperform the performance of major health care equity benchmarks. Stocks are picked out by using a quantitative formula that looks for fundamental growth and valuation.

Read the disclaimer, as Tom Lydon is a board member of Rydex Funds.

Max Chen contributed to this article.