Technology (XLK) vs Financials (XLF)
XLK (Technology Select SPDR) closed at $155.03 on April 21, 2026. XLF (Financial Select SPDR) closed at $51.73 on April 23, 2026.
Also known as: Technology (XLK) (ETF_XLK, tech sector) · Financials (XLF) (ETF_XLF, financials)
Why This Comparison Matters
XLK (Technology Select SPDR) closed at $155.03 on April 21, 2026. XLF (Financial Select SPDR) closed at $51.73 on April 23, 2026. The XLK/XLF ratio of 3.00 reflects sustained tech leadership through the AI cycle. XLK's top holdings include NVIDIA (15.14 percent), Apple (12.53 percent), Microsoft (9.64 percent), Broadcom (6.22 percent). XLF's top holdings include Berkshire Hathaway (11.46 percent), JPMorgan (11.33 percent), Visa (7.02 percent), Mastercard (5.58 percent), Bank of America (4.73 percent). The pair captures the cleanest growth-vs-value rotation in mega-cap equities. Tech outperforms when rates fall (lower discount rates boost growth valuations); financials outperform when rates rise (wider net interest margins).
XLK and XLF: Sector Composition
XLK holds 76 stocks representing the technology sector of the S&P 500. April 2026 top holdings: NVIDIA 15.14 percent, Apple 12.53 percent, Microsoft 9.64 percent, Broadcom 6.22 percent, Micron Technology 4.12 percent. The fund is concentrated in mega-cap names: top 5 represent 47 percent of assets. AUM approximately $70 billion, expense ratio 0.08 percent, P/E ratio 39.24x.
XLF holds 80 stocks across financials. April 2026 top holdings: Berkshire Hathaway 11.46 percent, JPMorgan 11.33 percent, Visa 7.02 percent, Mastercard 5.58 percent, Bank of America 4.73 percent. The fund includes diversified financial services (BRK.B, payment networks Visa/Mastercard) plus megabanks (JPM, BAC, WFC) and insurance. AUM approximately $50 billion, expense ratio 0.08 percent.
The Rate Cycle Differential
Tech and financials have opposite rate sensitivities. Tech stocks are long-duration assets: most of their value comes from future cash flows, which discount more heavily when rates rise. The 2022 episode saw XLK fall 28 percent peak-to-trough as rates rose. Financials benefit from rising rates: net interest margins (NIM) expand as banks reprice loans faster than deposits. The 2022 episode saw XLF fall only 18 percent versus broader market down 25 percent.
April 2026 environment: Fed funds at 3.50 to 3.75 percent (after 100 bp cut Sept-Dec 2024), 10-year yield 4.30 percent. The mid-cycle rate environment is roughly neutral for both sectors. Markets price 50 basis points of further Fed cuts through 2026. If cuts proceed as expected, XLK should continue outperforming. If the Iran war drives renewed inflation and Fed pause/hike, XLF would likely outperform.
XLK/XLF Through the AI Cycle
From November 2022 through April 2026, XLK gained approximately 100 percent versus XLF approximately 60 percent. The 40 percentage point XLK outperformance reflects the AI capex cycle's direct flowthrough to NVIDIA, Microsoft, and Broadcom. The XLK/XLF ratio expanded from 2.0 in November 2022 to 3.00 in April 2026, a 50 percent relative move.
The outperformance has been broad-based across cycle quarters. XLK outperformed XLF in 12 of 14 quarterly windows from Q4 2022 through Q1 2026. Brief XLF outperformance windows: Q4 2022 (post-CPI peak rate-sensitive financials initially benefited), Q1 2024 (banking crisis recovery + Trump election rally lifted XLF). The 2024 to 2026 trajectory has been cleaner XLK leadership.
Conditional Forward Response (Tail Events)
How Financials (XLF) has historically behaved in the 5 sessions following a top-decile or bottom-decile daily move in Technology (XLK). Computed from 1,289 aligned daily observations ending .
Following these triggers, Financials (XLF) rises 0.10% on average over the next 5 sessions, versus an unconditional baseline of +0.20%. 129 qualifying events; Financials (XLF) closed positive in 54% of them.
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Frequently Asked Questions
What is the XLK/XLF ratio?+
XLK closed at $155.03 on April 21, 2026; XLF at $51.73 on April 23, 2026. The XLK/XLF ratio is approximately 3.00. The ratio has held a 2.7 to 3.1 range through 2024 to 2026. Historical context: the ratio peaked at 4.0 in 2021 (post-COVID liquidity peak), bottomed at 0.7 in 2008 (financial crisis), averaged 2.5 over the past 5 years. Above 3.5 indicates extreme tech dominance; below 2.5 indicates financials catching up. The current 3.00 reading reflects sustained tech leadership through the AI cycle.
Why does XLK lead XLF?+
AI capex cycle. XLK's top holdings (NVIDIA 15.14 percent, Apple 12.53 percent, Microsoft 9.64 percent, Broadcom 6.22 percent) capture direct AI infrastructure spending. From November 2022 through April 2026, XLK gained approximately 100 percent versus XLF approximately 60 percent (40 percentage point outperformance). XLK outperformed XLF in 12 of 14 quarterly windows from Q4 2022 through Q1 2026. The structural advantage reflects technology's long-duration cash flow profile benefiting from low real rates plus the secular AI capex super-cycle.
What's in XLF?+
XLF holds 80 stocks across financials. April 2026 top holdings: Berkshire Hathaway 11.46 percent, JPMorgan 11.33 percent, Visa 7.02 percent, Mastercard 5.58 percent, Bank of America 4.73 percent. The fund includes diversified financial services (BRK.B, payment networks Visa/Mastercard) plus megabanks (JPM, BAC, WFC) and insurance. AUM approximately $50 billion, expense ratio 0.08 percent. The diversification across industries (banks, insurance, payment networks, asset management) produces lower concentration risk than XLK but with mixed rate sensitivity.
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Data sourced from FRED, CoinGecko, CBOE, and other providers. This page is for informational purposes only and does not constitute financial advice. Past performance does not guarantee future results.