Meta Drives Communication Services as Heavyweights Lead the Sector

The Communication Services Select Sector SPDR Fund (XLC), an exchange-traded fund tracking the group, closed +1.3% on Thursday, September 24 as large-cap strength lifted the sector. Inside the Communication Services sector, the cap-weighted return reached +1.9%, well ahead of the +0.5% equal-weighted return across its S&P 500 members. While 63.2% of sector members advanced, the gap between cap-weighted and equal-weighted performance shows that the largest holdings did most of the work. That push came primarily from Meta Platforms Inc., which finished +4.5% after unveiling a handheld hardware gadget for its Muse artificial intelligence assistant and expanding the software into smart glasses and commerce tools.

The sector stood out across the broader market on a session where 3 of the 11 sectors rose, as rising Treasury yields and geopolitical tensions weighed on most other equity groups. Within the fund, Paramount Skydance Corporation Class B Common Stock also supported the day, ending +2.2%. On the downside, EchoStar Corporation lagged the sector, ending -2.5%.

That top-heavy structure sits against a lean quality profile across the broader portfolio. EasyAlpha grades 87.1% of the fund's total weight, but just 27.6% of that graded weight sits in companies graded A or B, which represent the strongest fundamentals and have historically experienced lower risk of large drawdowns than companies graded D or E. The rest sits in average or lower-tier grades. That concentration in lower tiers helps explain why XLC has struggled for sustained traction, moving -1.8% over the past 100 sessions and -2.9% over the past twelve months despite posting +4.8% over the past six months. Without broader fundamental strength across the group, the fund remains reliant on sporadic rallies from its largest members.