Some strategists also argue that the financial sector may be a good area to look at this time around, given the potential for growth in a rising rate environment, along with potential tax and regulatory changes under the Donald Trump administration. After failing on the healthcare front, Congressional Republicans are likely to push forward with tax reform, looking to make that the centerpiece of their 2017 legislative accomplishments.
“Drilling down specifically into bank stocks, which make up a significant portion of the financial group, bullish sentiment also abounds. On Wednesday, the most heavily-traded contract of an ETF tracking banks was a call option betting on a 5.3% increase from the previous day’s close by December 15,” according to Business Insider. “That date is particularly significant because now, after Wednesday’s FOMC comments, economists think the central bank has a 63.8% chance of hiking rates, according to Bloomberg’s World Interest Rate Probability data. That’s a pretty hefty increase from the near 20% forecast from two weeks ago.”
For the week ended Sept. 20th, XLF added more than $750 million in new assets, bringing the ETF’s third-quarter inflows tally to over $1.3 billion.
For more information on the financial sector, visit our financial category.