US stock markets rallied on Wednesday
US stocks rose on July 1 on hopes of a Greece bailout. The Dow Jones Industrial Average added 138.40 points, or 0.8%, to 17,757.91. The S&P 500 Index (SPY) rose 0.7% to 2077.42, and the Nasdaq Composite rose 26.26 points, or 0.5%, to 5013.12.
The Financial Sector Select SPDR ETF (XLF), an ETF representing the US financials sector, was up 1.52% during the trading session ending on July 1, largely driven by insurance stocks, which rallied by 2.7%. In the past five trading sessions as of Wednesday, XLF had been down by 0.84%.
The financials sector outperforms
The insurance sector constitutes ~18% of the XLF ETF. Year-to-date, this sector has rallied by 1.14%. However, Wednesday’s gain was driven by Ace’s (ACE) acquisition of Chubb Group (CB). Meanwhile, the SPDR S&P Insurance ETF (KIE) surged 2.1% on Wednesday.
Chubb Group, which has a weight of 0.73% in the XLF ETF, rose by 26.12% by the close of trade on Wednesday. Year-to-date, the stock is up ~16%. Trading volumes surged to 28,806,065 shares on July 1, as compared to a trailing five-day average volume of 6,484,987 shares. However, Ace, having a greater weight of 1.14% in the ETF was up by a meager 0.8% on this news. In fact, in the previous five days of trade, the stock was down by 2.60%.
The financials sector saw a good day of trade, as just four stocks in the XLF portfolio closed in the red on Wednesday. The worst-performing stock among these was Genworth Financial (GNW), which tumbled 0.53% to close at $7.53. All sectors closed the day on a positive note, and the sectors with the lowest uptick were diversified financial services and commercial services, which were up 0.69% and 0.97%, respectively.
After the bloodbath witnessed on Monday, stock markets revived in the last two days of trade.