U.S. stocks were down across the board Wednesday after Federal Reserve Chairman Ben Bernanke said the central bank could start tapering its bond purchases this year if the economy cooperates.
Within sectors, financial stocks were holding up better to continue a trend that has been in place the past few months.
The financial sector has been in recovery mode over the past five years, supported by a recent increase in forecasted earnings. Higher capital levels, better risk management systems and tighter regulation has boosted shares and focused exchange traded funds.
According to Moody’s rating agency “sustained GDP growth and improving employment conditions will help banks protect their now-stronger balance sheets.”
Neena Mishra for Zacks reports that Moody’s changed their ratings of U.S.banks from “stable” to “negative,” due to the lack of earnings quality. However, this aspect of the sector is shadowed by the overall revision trends studied by Zacks. Financial sector earnings are expected to increase 19.1% over the second quarter of 2013, from the second quarter of 2012. The revisions trend for the S&P 500 is rated as neutral. [ETF Spotlight: Financial Sector]