US banks rebound after recession
The Great Recession is officially over for financial institutions. Since stocks bottomed out in early 2009, the financial sector has been one of the best performing sectors in the market. The Dow Jones US Banking Index is up ~60% since 2009, while the Financial Select Sector Index (XLF) has nearly doubled in the same period. Despite global tensions, markets are not close to another recession.
Year-to-date (or YTD) the Financial Select Sector SPDR ETF (XLF) has lost 5.26% of its value. Banks constitute ~48% of this ETF. Comparatively, the SPDR S&P 500 ETF (SPY) has lost 5.87% in the same period. Much of the downfall in markets is attributable to faltering growth in emerging market economies. Fundamentally, US banks are still doing well, as their second quarter earnings show.
Performance of major banks
Now we’ll look at how the biggest banks in the nation have done this year.
- Wells Fargo (WFC) returned -5.18% YTD. Since the lows of 2009, the stock has rallied 91.02%.
- Shares of Bank of America (BAC) have surged ~20% since 2009. However, in 2015 to date, the stock has underperformed the banking sector. It has generated negative returns of 11.97%.
- Year-to-date, shares of JP Morgan (JPM) have surged 5.87%. In the last month, the company’s shares have lost 8.54% despite stellar second quarter earnings. Since the 2009 crisis, shares of the company have gained 110%.
Investors looking for ETFs that track the financial sector have an array of options to choose from such as the iShares US Financial Services (IYG), the Financial Select Sector SPDR, and the Vanguard Financial ETF (VHF).