Additionally, the slowly expanding U.S. economy has also hindered lending growth in banks.
“Another headwind is the U.S. economy,” Goldsborough added. “While it unquestionably has shown some bright spots during the past several years, concerns about a less-than-strong economy generally has weighed on banks, which feel less inclined to lend in such an environment. Less lending means less growth for banks.”
Nevertheless, Wells Fargo announced Friday that second-quarter earnings met expectations and revenue beat Wall Street estimates, CNBC reports.
“I think it’s good news for the U.S. economy. Wells is always a good indicator. They have a national banking platform. Their CEO, John Stumpf, has been particularly bullish on the economy,” Raymond James analyst Anthony Polini said on CNBC. “This is a very good indicator that the economy is on track for an improvement.”
WFC is the largest single holding in the Financial Select Sector SPDR (NYSEArca: XLF), making up 8.9% of the ETF’s overall portfolio. XLF also includes JPM 7.5%, BAC 5.8%, C 5.1%, USB 2.8%, GS 2.4% and BLK 1.4%. The six companies set to report earnings results next week make up 25% of XLF’s overall portfolio. The fund has gained 4.4% year-to-date.
For more information on the financials sector, visit our financial category.
Max Chen contributed to this article.