Higher interest rates would help widen the difference between what banks charge on loans and pay on deposits, which would boost earnings for the financial sector.
SEE MORE: Bullish Signs for Bank ETFs
Financials have been underperforming this year as an extended low-rate environment weighed on the sector’s earnings outlook. For instance, XLF is only up 2.3% so far this year, compared to the S&P 500’s 7.7% gain.
John Canally, chief economist strategist for LPL Financial, grants that a rate increase from the Federal Reserve would help financials, “I think having Mrs. Clinton as president would likely be a drag [for the financial sector],” reports CNBC.
For more information on the banking sector, visit our financial category.
Financial Select Sector SPDR
