Heading into this year, many fixed income traders were expecting the Fed to hike rates multiple teams, move that many market participants believe would be beneficial to banks.
Bank ETFs are benefiting from speculation that the Federal Reserve will boost interest rates multiple times this year. With a steepening yield curve or wider spread between short- and long-term Treasuries, banks could experience improved net interest margins or improved profitability as the firms borrow short and lend long.
“Erin Gibbs, equity chief investment officer at S&P Global, notes that the group’s earnings growth expectations are in line with those of the overall S&P 500, and that banks’ valuations have remained in a “range” for a few months,” reports CNBC.
It appears some market observers are still waiting to be impressed by the sector’s earnings reports. The financial sector strengthened after the three banks revealed strong quarterly profits and expressed optimism for the year ahead in the ir first public comments over earnings, reports Tanya Agrawal for Reuters.
According to Thomson Reuters, the combined profit of S&P 500 companies is projected to have returned 6.2% in the fourth quarter, largely due to improving results out of the financial sector.
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