Financial stocks and ETFs have been leading the S&P 500’s latest push higher on optimism a fiscal cliff deal can be reached and as Wall Street analysts turn bullish on banks.
Monday’s rally carried the financial shares in the S&P 500 to a two-month high and extended the group’s lead among the index’s 10 sectors this year, WSJ.com reports.
Financial Select Sector SPDR (NYSEArca: XLF) is breaking out to its highest level in over a year. The sector ETF is up 27.1% year to date, compared with a 16.2% gain for iShares S&P 500 (NYSEArca: IVV).
On Monday, closely followed analyst Meredith Whitney flipped bullish on the financial sector with upgrades of bank stocks.
“Whitney cited several factors that will lead bank stocks to rise in the near term, particularly the results of the Federal Reserve’s stress test in January, CNBC reported,” Reuters said. “Bank of America, for instance, will be able to quadruple its dividend after passing that test, Whitney said, according to CNBC.”
Financial stocks are on pace to outperform the rest of the stock market this year for the first time since the financial crisis, CNNMoney reports. Traders said rising Treasury yields and an improving housing market could provide more fuel for bank shares.
Financial Select Sector SPDR
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