|Bid||76.11 x 800|
|Ask||77.63 x 800|
|Day's Range||0.00 - 0.00|
|52 Week Range|
|PE Ratio (TTM)||N/A|
|YTD Daily Total Return||28.97%|
|Beta (5Y Monthly)||1.16|
|Expense Ratio (net)||0.10%|
As stocks are soaring, the wealth effect should be realized by investors. These cyclical sector ETFs and stocks appear as good picks in this scenario.
Exchange-traded funds with exposure to financial sector stocks popped higher Friday after the Federal Reserve announced plans to buy Treasury bills in order to maintain reserves in the banking system. Yields on U.S. government bonds, including the benchmark 10-year [S: tmubmusd10y], have soared this week on hopes for a U.S.-China trade deal. The Vanguard Financials ETF was 2.1% higher late morning, and the Financial Select Sector SPDR was up 2.2%. Banks benefit from higher yields overall, and from a wider spread between the short-term yields they pay for deposits and the longer-term yields they receive for lending.
Global banking firm J.P. Morgan has reached new highs despite the Federal Reserve cutting interest rates, which could put the banking sector in a bind as lower rates could affect their lending businesses. Analysts like Miller Tabak’s equity strategist Matt Maley said that as bond prices climb, banking stocks could come under pressure. Investors have been piling in on bonds the last few months as a go-to safe haven shift, which has caused Treasury yields to fall and bond prices to climb.
As big banks continue to report their second-quarter earnings this week, some are already expressing concern with respect to the possibility of rate cuts by the Federal Reserve through 2019. In particular, profits could shrink as a result of lower interest rates, which could put the Direxion Daily Financial Bear 3X ETF (FAZ) in play. FAZ seeks daily investment results that equate to 300% of the inverse (or opposite) of the daily performance of the Russell 1000® Financial Services Index.
Cheaper valuation, better earnings growth prospects, solid performance in Stress Test, dividend hike announcements and less chances of a rate cut should position financial ETFs in a good spot in 2H.
The Federal Reserve gave banks the green light to offer more payouts to investors after 18 of the largest financial firms passed the second round of stress tests designed to assess the health of the financial system. For financial sector bulls, this could boost the Direxion Daily Financial Bull 3X ETF (FAS) . FAS seeks daily investment results worth 300 percent of the daily performance of the Russell 1000 Financial Services Index.