Tech-Software ETF Falls 16.5% While Data-Center Funds Gain 8-15%
iShares Expanded Tech-Software ETF has plunged 16.5% year-to-date while data-center ETFs like digital infrastructure and semiconductor funds have climbed 15% and 8%. The Fed’s Beige Book reports consumer spending softening as manufacturing gains driven by surging orders for electrical equipment, steel and data-center construction lift industrial activity.
1. Two-Speed Economy Emergence
The Fed’s Beige Book indicates U.S. economic momentum has fragmented, with five of twelve districts reporting flat or declining activity and cautious consumers delaying major purchases amid rising price sensitivity.
2. Data-Center Driven Manufacturing Growth
Manufacturing activity strengthened in eight districts as surging orders for electrical equipment, metal products and construction tied to data-center and AI infrastructure buildouts boosted industrial output.
3. Divergence in ETF Performance
ETFs focused on data-center infrastructure and semiconductors have rallied between 8% and 15% so far this year, contrasting sharply with a 16.5% year-to-date decline in the iShares Expanded Tech-Software ETF.
4. Implications for Software Sector
The software-focused ETF’s underperformance reflects shifting capital toward asset-heavy data-center projects and automation investments, signaling challenges for consumer-oriented and asset-light tech companies.