Interest Rate Speculation Bolsters Financial Stocks, ETFs

Supporting bets for higher rates, a recent report revealed consumer spending activity increase for the fourth straight month in July.

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.

For more information on the banking sector, visit our financial category.

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