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Financial Services ETFs Brace for Volatile Earnings Season


J.P. Morgan Chase (JPM) and Wells Fargo (WFC) delivered quarterly results last Friday with the former reporting its first loss under CEO Jamie Dimon.

Dow component J.P. Morgan may be a special case because of a whopping pretax legal charge of $9.2 billion, but it still looks like this could be a volatile earnings season for the financial services sector, the second-largest sector weight in the S&P 500 behind technology. That volatility could be the result of hyperbole from the media and traders.

“Granted, coverage should be somewhat muted. Economically, we’ve steered into a nasty patch of weather. The banks are obviously sensitive to that. But if you look hard, you can see that the media – and, by extension, traders – are overreacting by a length,” wrote Marek Fuchs for The Exchange on Yahoo Finance. 

Exaggeration aside, the week ahead is a critical one for financial service s ETFs, including the group’s biggest member: The Financial Select Sector SPDR (XLF) . It has been a good year for XLF, for the most part. The fund ranks as the third-best sector SPDR, trailing only its discretionary and industrial equivalents. Additionally, XLF has been one of the most prolific asset gatherers among sector ETFs, raking in $2.6 billion in new investments this year. [XLF Races for Inflows Bronze Medal]