Financial exchange traded funds led the market higher Wednesday on speculation European Union leaders will be able to quell the unrest in debt markets.
Financial Select Sector SPDR (NYSEArca: XLF) rallied nearly 3%. The sector ETF also climbed above its 50-day simple moving average on Wednesday. [Stock ETFs Try to Break Free of Trading Range]
Bank stocks were rallying one day before JP Morgan (NYSE: JPM) kicks off the earnings season. Bank of America (NYSE: BAC), Citigroup (NYSE: C), Wells Fargo (NYSE: WFC) and JP Morgan were all up about 3% or more Wednesday. JP Morgan is scheduled to report quarterly earnings on Thursday.
Around the country, Occupy Wall Street protests are gathering steam along with the backlash against Wall Street after the 2008 financial meltdown. The protesters are railing against Wall Street greed and are calling for higher taxes for the rich.
Still, big bank stocks are rallying into the quarterly reporting season. Investors will be looking for updates on the credit markets and how banks are faring in the low interest rate environment.
The financial sector is also catching a bid on easing concerns over Europe’s debt crisis.
Jose Manuel Barroso, President of the European Commission, issued a warning on Wednesday to take greater action in containing the Eurozone debt problem, report John O’Donnell and Jan Strupczewski for Reuters.
“To put a stop to the threat… we must strengthen firewalls. We must have credible stronger instruments,” Barroso said.
“There’s been such a lack of confidence in policy makers over the last two to three months that the hurdle is pretty low—you get some progress in the right direction and the markets are going to respond favorably,” Jeff Layman, chief investment officer at BKD Wealth Advisors, said, reports Jonathan Cheng for WSJ.com. [Regulatory, Credit Fears Hit Financial Stocks]
Other financial ETFs moving higher Wednesday included SPDR KBW Bank (NYSEArca: KBE) and Direxion Daily Financial Bull 3X Shares (NYSEArca: FAS), a 300% leveraged ETF. Meanwhile, Direxion Daily Financial Bear 3X Shares (NYSEArca: FAZ) shed about 7%. [Aggressive Call Buying in Financial ETFs; Bond Fund Outflows]
Financial Select Sector SPDR
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Max Chen contributed to this article.