This is a big week for earnings reports from the financial services sector as nearly a quarter of the Russell 1000 Financials Index delivers third-quarter results. Data pertaining to the Financial Select Sector SPDR (NYSEArca: XLF) indicate investors are not sticking by the financial services sector this earnings season.
U.S. banks are expected to announce their most profitable third quarter since the financial downturn after the recent tax reform cut the tax bills for many banks and other corporations, reports Telis Demos for the Wall Street Journal.
However, with the tax cuts already more or less priced into the markets, investors and analysts have now focused on potential concerns over the banks’ future growth outlook. Specifically, growth in bank lending activity is slowing and trading is expected to be weak
“Bank bears are back. Investors yanked more than $1 billion from the $29 billion Financial Select Sector SPDR Fund (XLF) on Friday, the largest outflow in more than a decade,” reports Bloomberg. “In addition, trading in the fund hit $3.6 billion, more than double its average daily volume for the past year, after reaching $4.8 billion on Thursday.”