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Financial ETFs On The Rise After A Slew Of Banking Stock Earnings

Friday, January 13, 2017 9:17
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With a slew of major U.S. banks reporting earnings this morning, finance-focused ETFs naturally are garnering a lot of attention — and racking up more gains.

The banking sector — most commonly represented by the XLF — has surged since Donald Trump’s surprise election win back in November. Prevailing wisdom is that Trump will roll back major banking regulations, and usher in a new era of fiscal freedom again. If true, we could see a return to the pre-crisis days where banking stocks were among the best performers for several years straight, as those companies engaged in various questionable practices that temporarily bolstered their bottom line while piling up risk levels so high that the entire financial system nearly collapsed.

Getting back to today’s earnings results in the banking sector, results were generally mixed. JPMorgan stood out on the upside, and its shares are gaining well over 1% on the day so far. Despite a seemingly very weak quarter, Wells Fargo is also up big, tacking on more than 2.5% in early trading. PNC is also up around 2% after its own mixed results.

The world’s largest asset manager and ETF issuer, BlackRock, is also faring well (+1.4%) after posting solid numbers. BlackRock’s iShares unit also recently became the first-ever ETF issuer to pass the $1 trillion under management mark, as it continues to outpace its rivals.

With so many banking stocks on the rise today, finance-focused ETFs are on gaining in early trading as well. The Financial Select Sector SPDR Fund (NYSE:XLF) was trading at $23.66 per share on Friday morning, up $0.28 (+1.20%). Year-to-date, XLF has gained 1.76%, versus a 1.61% rise in the benchmark S&P 500 index during the same period, and is now within $1 of its 52-week high of $24.64.

XLF currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 38 ETFs in the Financial Equities ETFs category.

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