Financial exchange traded funds were the worst-performing sector ETFs on Thursday after JP Morgan (NYSE: JPM) announced quarterly results and a cautious outlook for credit markets.

Financial Select Sector SPDR (NYSEArca: XLF) fell as much as 3% Thursday morning before paring the loss.

JP Morgan’s quarterly results showed that credit quality improvement slowed while investment banking revenues were weaker than expected, particularly trading results, according to a research note from Sterne Agee.

Large-cap financial stocks are down about 20% on the year but have rallied 13% since a week ago Tuesday, according to ConvergEx Group Chief Market Strategist Nicholas Colas.

“The dramatic recovery in U.S. equity market prices from their week-ago lows has all the flavor of a ‘Walk towards the light’ brush with death,” he wrote in a report Thursday. “The most important indicator of that return to the world of the living is the rally in financials. That also makes future action in this group the make-or-break factor in any further market advance.”

Showing Page 1 of 2