U.S. stocks soared Thursday after Federal Reserve Chairman Ben Bernanke pledged to keep interest rates at historic lows but one recent outperforming sector missed out on the rally: regional banks.
SPDR S&P Regional Banking ETF (NYSEArca: KRE) has been noticeably weak the past few days after a strong rally that kicked off in late April.
For example, KRE slipped Thursday for the second straight day even though the S&P 500 rose Wednesday and opened sharply higher on Thursday.
The S&P 500 is up more than 2% so far this week while KRE is down over 2%.
The regional bank ETF has pulled back this week along with 10-year Treasury yields after a sharp move higher. [Regional Bank ETFs in Focus on Higher Rates]
Investors will be watching KRE to see if this is just a normal pullback after a strong run, or the start of something worse.
SPDR S&P Regional Banking ETF
Updated with full disclosure: Tom Lydon’s clients own KRE.