An exchange traded fund tracking the U.S. financial sector was set for a lower open Friday after Fitch Ratings downgraded the debt ratings of Bank of America (NYSE: BAC), Citigroup (NYSE: C) and Goldman Sachs (NYSE: GS).
Fitch cut seven large banks overall in the U.S. and Europe, saying lenders are “are particularly sensitive to the increased challenges the financial markets face,” according to an FT report.
“Over time market conditions are likely to ease, but Fitch expects market volatility to remain above historical averages and economic growth in developed markets to remain subdued for a prolonged period. This makes many business lines in securities operations more difficult, due to lower activity and higher funding costs,” Fitch said. [ETF Chart of the Day: Financials]
Financial Select Sector SPDR (NYSEArca: XLF) lost ground after the Fitch downgrade.
The ETF is off 17.7% this year on the European debt crisis and fears the economy is slowing. [Short Interest Surges in Financial ETF]
Financial Select Sector SPDR
Full disclosure: John Spence owns XLF.
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