Investors, though, should still brace for a potential stress test failure. For instance, Bank of America stated that regulators demanded changes to some of its models, and Goldman Sachs (NYSE: GS) came close to failing its initial test last week. GS makes up 2.5% of XLF. [Bank ETFs Strengthen on Passing First Round Stress Tests]
However, Citigroup (NYSE: C) is expected to expand its dividend payouts as many anticipated the bank to have made drastic changes after failing its test on qualitative grounds last year. C makes up 5.3% of XLF.
Financial Select Sector SPDR
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Full disclosure: Tom Lydon’s clients own shares of IYF.