Another point of attraction for XLF and rival financial services ETFs has been the discounted valuations of big bank stocks. However, the cheapness of U.S. banks belies the strength of the financial sector. Over few years, banks have shed unprofitable businesses and assets while bulking up capital to return some to shareholders through stock buybacks and dividends, the Wall Street Journal reports.
The wider discrepancy between deposit and prime rates could translate to improved profit margins and a potentially stronger financial sector ahead. [Bank Sector ETFs Could Lead as Rates Rise]
“Given JPMorgan‘s performance after an upbeat earnings report, investors are looking ahead to earnings reports from other major banks. Mayo is bullish on the banks and says that people should look to them as ‘pillars of strength’ or ‘safe-havens in the current environment,’” according to CNBC.
Financial Select Sector SPDR
