Some investors have been pondering the veracity of the recent rally in U.S. stocks. One of the more encouraging signs is that there has been leadership from cyclical sectors such as technology and consumer discretionary. Those are the S&P 500’s largest and fourth-largest sector weights, respectively.

The Technology Select Sector SPDR (NYSEArca: XLK), the largest technology exchange traded fund by assets, is up 10.6% year-to-date. Buoyed by the ongoing ascent for shares of Inc. (NASDAQ: AMZN), the Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) is up 8% this year.

The tech sector could even see more free cash on hand if Congress proceeds with plans to cut down capital gains on repatriated earnings or follow in President-elect Donald Trump’s proposed repatriation tax holiday policy that would encourage large multi-national companies to bring back hundreds of billions of dollars in cash to the U.S. for possible use in dividends, deals or other projects. Trump plans to levy a 10% repatriation tax on U.S. companies’ overseas profits from foreign subsidiaries, compared to the current 35% tax rate.

“Although market breadth is still fairly solid, weakness in small stocks and the economically sensitive transportation sector counterbalance it,” reports Michael Kahn for Barron’s. “Fortunately for the bulls, leadership by technology and consumer discretionary is still in place. These are some of the usual suspects that lead when the market is strong. The financial sector is usually in that group, too, but it has fallen fairly sharply.”

XLK and other tech ETFs could also be benefiting from rising interest rates. While income-related equities have traditionally demonstrated the most vulnerability in the year with rates on the rise, the energy, technology and health care sectors have historically outperformed on average relative to the markets, according to Fidelity Investments.

“Tech and consumer discretionary are beating the market, while financials are neutral with negative implications,” according to Barron’s. “Investors looking to put money to work in the market would be best served by prospecting in tech and consumer discretionary.”

For more information on the tech sector, visit our technology category.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.