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Should You Bank on Financial ETFs Now?

Financial stocks are among the best performing areas of the market this year. The sector is up about 38% year-to-date, behind only energy sector.

Third quarter earnings season started on a strong note with big banks reporting excellent earnings. Capital markets revenues at these banks were boosted by the merger mania and trading boom.

Consumer spending is rising and likely to exceed pre-pandemic levels, which helps credit card businesses at banks. Loan growth is rising slowly but is expected to pick up if the economic recovery gains steam.

Interest rates have been rising since the Fed signaled it was ready to start tapering its massive bond purchase programs in November and could raise rates next year. A strong economy and higher interest rates benefit all banks’ profitability, but regional banks will benefit more since interest rate spread is their main source of earnings.

While valuations of financial stocks have expanded this year, they still look attractive when compared to the broader market.

The Financial Sector SPDR Fund (XLF) is the most popular product in the space.  Berkshire Hathaway Inc. (BRK.B) and JP Morgan (JPM) are its top holdings.

iShares U.S. Broker-Dealers & Securities Exchanges ETF (IAI) provides exposure to investment banks, discount brokerages, and stock exchanges. Goldman Sachs (GS) and. Morgan Stanley (MS) are its top holdings.

The SPDR S&P Regional Banking ETF (KRE) is an equal-weighted ETF. Please watch the short video above to learn more about these ETFs.


Infrastructure Stock Boom to Sweep America

A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.

The only question is “Will you get into the right stocks early when their growth potential is greatest?”

Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.

Download FREE: How to Profit from Trillions on Spending for Infrastructure >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
The Goldman Sachs Group, Inc. (GS): Free Stock Analysis Report
 
JPMorgan Chase & Co. (JPM): Free Stock Analysis Report
 
Morgan Stanley (MS): Free Stock Analysis Report
 
Berkshire Hathaway Inc. (BRK.B): Free Stock Analysis Report
 
Financial Select Sector SPDR ETF (XLF): ETF Research Reports
 
SPDR S&P Regional Banking ETF (KRE): ETF Research Reports
 
iShares U.S. BrokerDealers & Securities Exchanges ETF (IAI): ETF Research Reports
 
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