Sharp declines recently in U.S. large-cap banks such as Bank of America (NYSE: BAC) and Morgan Stanley (NYSE: MS) are weighing on financial exchange traded funds as the embattled sector lags the overall market.
“It’s not a secret that financials as a group have been underperforming the rest of the market for years. And sure, the S&P 500 has put together a tremendous rally since 2009 without the leadership from the banks. But it is very difficult for the market to keep going higher if financials are making new lows and dragging everyone else with them,” said J.C. Parets at All Star Charts.
The chart below shows the price ratio of a financial sector ETF against the S&P 500. The sector has underperformed the broader market this month and the ratio is testing the October low.
