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6 Big Bank Stocks May Face More Pain Ahead

Mark Kolakowski

Many big investors proclaimed that bank stocks would be market leaders in 2018, fueled by deregulation, rising interest rates and increasing returns of capital to shareholders via buybacks and dividend increases. Instead, shares of the 6 largest U.S. banks are all down significantly so far this year, and the Financial Select Sector SPDR ETF ( XLF) is down roughly 4% year to date through the open on July 5. Craig Johnson, the chief market technician at Piper Jaffray, sees a "cloudy" outlook for the ETF, which is dominated by large cap U.S. banks, per his recent comments on CNBC. Johnson shared three reasons for concern about large cap U.S. bank stocks, making specific reference to the Financial Select Sector SPDR ETF (XLF) as a key proxy for the industry.