Financial stocks leading the recent market bounce and Warren Buffett’s $5 billion investment in Bank of America (NYSE: BAC) have triggered talk that bank exchange traded funds have finally hit bottom.

SPDR KBW Bank ETF (NYSEArca: KBE) is up 8.5% over the past week, roughly doubling the return of the S&P 500. [Buffett Lifts Hopes Financial ETFs Have Hit Turning Point]

“Maybe the strongest evidence that the market hit bottom earlier this month comes, ironically, from the financial sector — the very sector whose weakness earlier in the year foreshadowed the overall market’s imminent trouble,” writes Mark Hulbert for MarketWatch. “Now, however, it’s the financial sector’s turn to lead the market higher.”

Still, the bank ETF is one of the worst sector performers over the past month with a decline of about 14%, and is down more than 20% year to date.

Financial stocks have recovered somewhat the past week on hopes the economic outlook isn’t as bleak as many bears predict. Speculation of further stimulus from the Federal Reserve has also brightened sentiment on the troubled sector.

Since February 2007, financials are the worst-performing sector with a 66% decline, according to Crossing Wall Street.

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