The financial sector has been a top-performing sector in 2012 after last year’s debacle, but an unexpected drop in new U.S. home sales prompted a round of profit taking in bank stocks and related exchange traded funds.
SPDR S&P Bank ETF (NYSEArca: KBE) was down 2.5% Thursday and is falling back down to its 200-day simple moving average after only recently crossing over. KBE fell below the trend line back in June 2011. The fund is still up 9.5% year-to-date and has surged 30% since the most recent October 3 market low.
Financial stocks, along with the rest of the equities market, have been rising on the risk-on environment, as positive economic data helped support the markets. [Worst to First: Financial, Materials ETFs Lead Market]
Bank of America (NYSE: BAC) announced that it earned $2 billion in the fourth quarter, reversing loses and ending the year up $1.4 billion, according to the Associated Press.
Other large bankers, like Citigroup (NYSE: C), Wells Fargo (NYSE: WFC) and J.P. Morgan Chase (NYSE: JPM), have also announced stronger loan-growth numbers in the fourth quarter, according to the Wall Street Journal.
However, on Thursday, the government revealed that new U.S. Home sales dropped 2.2% in December, whereas economist expected of a modest increase, which underscored the Fed’s view that the housing market is holding back U.S. growth. New home sales ended 2011 down 6.2%, a record low of 302,000, according to MarketWatch.