Wall Street has been riding high with the S&P 500 and the Dow Jones hitting fresh highs. This is primarily being driven by optimism over speedy economic recovery from the pandemic-driven recession. Continued progress in more COVID-19 vaccines, rapid vaccinations, reopening of the economy and a slew of new stimulus measures have been the major catalysts. The Fed has pledged to keep interest rates near zero through 2023.

Notably, the S&P 500 topped the 4,000 milestone for the first time at the end of last week with the strong upside potential still in the cards. The index is up 8.6% so far this year (read: S&P 500 Tops 4,000: Are ETFs Awaiting More Gains?).

President Joe Biden’s new $2 trillion spending plan to improve transportation, communication and power infrastructure further brightened the outlook for stocks. Additionally, consumer confidence is spiking lately with the University of Michigan’s final sentiment index climbing to a pandemic high of 84.9 in late March and the Conference Board on consumer confidence index jumping to 109.7 in March — the highest level since the onset of the pandemic in March 2020.

Signs of a healing labor market and better-than-expected earnings added to the strength. This is especially true as hiring in March surged to a seven-month high while unemployment dropped to a pandemic low of 6%. Meanwhile, the overall earnings picture continues to improve — a trend that will accelerate moving toward the summer months as signs of a sharp economic rebound emerge. Total Q1 2021 earnings are expected to be up 19.9% from the year-ago level on 5.6% higher revenues with a combination of easy comparisons and strong gains in a number of sectors, per the Earnings Trends (read: 4 ETF Zones Set to Bloom in a Booming Job Market).

The combination of all the factors will lead to pent-up demand, resulting in higher demand for all types of products and services in the economy. In fact, U.S. services activity in March surged to a record high due to robust growth in new orders. This indicates a roaring economy boosted by increased vaccinations, easing of restrictions and massive fiscal stimulus.

While the stock market gains have been broad-based, several ETFs have easily crushed the market by wide margins so far this year and have a solid Zacks ETF Rank #1 (Strong Buy) or 2 (Buy). Below, we have presented a bunch of top-performing ETFs from different industries that are likely to continue outperforming, should the trends prevail.

SPDR S&P Retail ETF (XRT Quick QuoteXRT - Free Report) – Up 40.9%

With AUM of $623.3 million, this product targets the broad retail sector by tracking the S&P Retail Select Industry Index. It holds 102 securities in its basket with key holdings in Internet & direct marketing retail, automotive retail, apparel retail, and specialty stores. The fund charges 35 bps in annual fees and has a Zacks ETF Rank #2 (read: 5 Best-Performing Sector ETFs of Q1).

Invesco S&P SmallCap Consumer Discretionary ETF (PSCD Quick QuotePSCD - Free Report) – Up 39.2%

The fund targets the small-cap segment of the broad consumer discretionary space by tracking the S&P SmallCap 600 Capped Consumer Discretionary Index. It holds 92 securities in its basket with specialty retail taking the largest share at 34.5% while household durables, hotels, restaurants and leisure, textile, apparel & luxury goods, and auto components account for a double-digit exposure each. The product has attracted $106.4 million in AUM and charges 29 bps in annual fees. It has a Zacks ETF Rank #2.

First Trust Nasdaq Bank ETF (FTXO Quick QuoteFTXO - Free Report) – Up 33%

This fund follows the Nasdaq US Smart Banks Index, which measures the performance of U.S. companies within the banking industry. It holds 29 securities in its basket and charges 60 bps in annual fees. The ETF has AUM of $227.3 million and has a Zacks ETF Rank #2 (read: 4 Reasons Why Bank ETFs Have More Room to Rally).

SPDR S&P Transportation ETF (XTN Quick QuoteXTN - Free Report) – Up 26.5%

This fund offers broad exposure to the transportation sector with the largest allocation to trucking, airlines, and air freight and logistics. It follows the S&P Transportation Select Industry Index, holding 41 stocks in its basket. With AUM of $734.1 million, the fund charges 35 bps in fees per year from investors and has a Zacks ETF Rank #2.

Vanguard S&P Small-Cap 600 Value ETF (VIOV Quick QuoteVIOV - Free Report) – Up 26%

This ETF follows the S&P Small-Cap 600 Value Index, which is composed of the value companies in the S&P 600. It holds 473 securities in its basket with key holdings in financials, industrials and consumer discretionary. The fund has amassed $1.2 billion in its asset base and charges 15 bps in annual fees. It has a Zacks ETF Rank #2 (read: 3 ETFs to Invest in Cheapest Value Stocks).

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>