Monthly Roundup: US Financials

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Part 4
Monthly Roundup: US Financials PART 4 OF 7

Banking Stocks Gained as Investors Begin to See Value in a Rate Hike

Banking stocks gained in November

During November 2015, financial markets recorded big gains as investors welcomed a stronger possibility of a Federal Reserve rate hike in December. Banking stocks, which stand to benefit from rising interest rates, also gained after traders digested the minutes from the Fed’s October policy meeting.

The minutes showed that officials believed that the economy could improve enough to justify a rate hike at the central bank’s meeting in December. The Financial Select Sector SPDR ETF (XLF), which serves as a barometer for US financial stocks, gained 0.6% during the month while the SPDR S&P Regional Banks ETF (KRE) rose by 4.3%.

Banking Stocks Gained as Investors Begin to See Value in a Rate Hike

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On average, banking stocks within the XLF ETF gained 4.4% during November. Asset management and custodian banks within XLF outperformed the subgroup and rallied 7.5% during the month, followed by regional banks that gained 4.4%. In contrast, consumer finance stocks lost 0.8% during the month.

Stock performance

Of the 22 banking stocks within the XLF ETF, 20 stocks delivered positive returns in November. Comerica (CMA) and Northern Trust (NTRS) were the clear outperformers, rallying 9.0% and 8.9%, respectively.

Meanwhile, Keycorp (KEY) and Capital One Financial (COF) underperformed the banking subgroup. These stocks generated returns of -2.2% and -0.8%, respectively, during the month. Year-to-date, these stocks have returned -5.4% and -4.3%, respectively.

Banking stocks that have posted major gains during the year included:

  • Northern Trust (NTRS): added 11.3% of value so far in 2015
  • Huntington Bancshares (HBAN): gained 10.8% in value year-to-date

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