“Furthermore, banks recently passed stress tests confirming that they are fortresses, and they were cleared to do a lot of financial engineering. These are buybacks and dividends which will support their stock prices. Without a major change in the macroeconomics, the XLF ETF should remain a great value here,” according to InvestorPlace.
Although the Fed has raised interest rates twice this year with another rate hike likely coming before the end of 2017, there are concerns about the central bank’s dovish tone and its impact on ETFs such as XLF. It is expected the Fed will boost borrowing costs one more time before the end of this year and that as many as three rate hikes could be on tap for 2018.
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