Near-Term Caution on Bank ETFs


In the wake of the post-election surge, investors in bank stocks and ETFs now turn their attention to the Federal Reserve and the possibilities of a December interest rate hike, which would be the first this year.

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. Regional banks are among the stocks most positively correlated to rising interest rates because higher rates improve net interest margins.

Financial Select Sector SPDR (NYSEArca: XLF)