Reform Initiatives Provide Strong Impetus to Financials
The benchmark index, the S&P 500 (SPX-INDEX) (SPY), rose 2.8% in November. It has risen for the eighth consecutive month—its longest winning streak since January 2007. Last week, the index rose 1.5%, while the Dow Jones Industrial Average (DJI-INDEX) (DIA) rose 2.9%. In contrast, the NASDAQ Composite (COMP-INDEX) (QQQ) fell 0.60%. The rally in benchmark indices has come amid hopes that Congress might pass tax cuts by the end of the year.
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Financials are on a high
Financial stocks continued to be driven by changes in regulations and taxes. Last week, the S&P 500 Financial Index rose 5.2%. All of the major bank stocks rose over 5%. JPMorgan Chase (JPM), the leader of the pack, rose 6.6%. Other major gainers included US Bancorp (USB), Morgan Stanley (MS), Bank of America (BAC), and Goldman Sachs (GS) with a rise of 5.92%, 5.89%, 5.68%, and 5.51%, respectively.
The Vanguard Financials ETF (VFH) and the Financial Select Sector SPDR ETF (XLF) also rose and reported gains of 4.8% and 5.2%, respectively. The S&P Insurance Select Industry Index (SPSIINS) posted healthy gains of 2.3%.
Stronger economic growth, expectations of another rise in the interest rates, and lower regulatory barriers on the horizon are providing a strong impetus to financial stocks.