Although fundamentals such as an improving housing sector, a turning unemployment picture and decent economic data support a run-up in banking stocks, the low-interest rate climate can be a headwind. Strong earnings reported from banking giants JP Morgan Chase (NYSE:JPM) and Goldman Sachs have bolstered sentiment for the financial sector. Furthermore, profits have been derived from sound, traditional sources rather than bad debt, reports Dutram. [Regional Bank ETFs for Financial Sector Exposure]
Bank-related ETFs include SPDR S&P Bank ETF (NYSEArca: KBE), PowerShares Dynamic Banking (NYSEArca: PJB), PowerShares KBW Bank ETF (NYSEArca: KBWB).
A recovery in the banking sector has been long awaited, as this is the corner of the market looked to as an indicator of overall economic health. The growth momentum started in the third quarter of 2012, up about 7%, as banks posted healthy earnings not seen in about 6 years. [Regional Bank ETFs: Best and Worst Performing Banks]
iShares Dow Jones U.S. Broker Dealers Index Fund
Tisha Guerrero contributed to this article.