Exchange traded funds pegged to global financial stocks rallied Thursday after the European Central Bank said it was coordinating with other central banks to provide dollar liquidity. The surprise move is designed to ease the funding pressures in Europe.
Financial Select Sector SPDR Fund (NYSEArca: XLF) was up 1.5% in recent trading while bank stocks jumped in Europe after the ECB announcement.
However, financial ETFs are lagging the rally in U.S. stocks over the past five weeks.
“Stocks put together a pretty good rally over the last five weeks, but the finance sector continues to show relative weakness,” according to StockCharts.com.
“All nine sectors are keeping pace with gains at or above the S&P 500 gain,” it added, but the financial ETF has gained “considerably less.” Since Aug. 8, the financial fund is up 3.6% compared with the 6.2% gain for the S&P 500, according to the report.
On Thursday, Morgan Stanley (NYSE: MS) said John Mack will step down as chairman and leave the board as expected at the end of 2011. Morgan Stanley shares were down 42.6% year to date as of Wednesday, highlighting the pain in the banking sector in 2011. Investors are concerned over a slowing global economy, Europe’s debt crisis and new regulations for banks.
The financial ETF is down roughly 20% so far this year. It continues to underperform the S&P 500 on a relative basis (see second chart below).
Financial Select Sector SPDR Fund
