The recently passed tax reform legislation could also be a boon for regional banks.
“It could also have indirect benefits for the sector. Expected stimulus from the changes to the tax code could speed growth in the U.S. economy, giving a lift to lending activity. Higher economic growth should then encourage the Federal Reserve to raise the fed funds rate at a faster pace, pushing banks to increase their own interest rates,” according to CNBC.
Risk-tolerant traders who want capitalize on the short-term volatility have a number of leveraged and inverse ETF options to enhance potential returns. For instance, the Direxion Daily Regional Banks 3x Bull Shares (NYSEArca: DPST) can capitalize on short-term views on further strength in the financial sector, or the Direxion Daily Regional Banks 3x Bear Shares (NYSEArca: WDRW) can express short-term hedge of the opposite.
For more information on the financial sector, visit our financial category.