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The Banks in XLF: All Posted Negative Returns



Banks tumbled on concerns of oil prices

The week ended January 22, 2016, saw some improvements in stock markets as oil prices somewhat recovered. During the week, WTI (West Texas Intermediate) crude oil futures rose 9% to $32.19. In the United States, the broad-based SPDR S&P 500 ETF (SPY) rose 1.4% during the week.

Shares of financials and technology companies were affected the worst last week, falling more than 5%. The week also marked earnings releases of major US banks such as Goldman Sachs, Morgan Stanley, and Bank of America. All these banks reported better-than-expected earnings but expressed concerns over plunging oil prices.

The Financial Select Sector SPDR ETF (XLF), which serves as a barometer for US financial stocks, closed at $21.28 on January 22, falling 2.9% during the week. The Vanguard Financials ETF (VFH) and the iShares Financials ETF (IYF) generated returns of -2.5% and -2.5%, respectively, during the week.

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While all subgroups within the financial sector bled last week, banks were affected the worst. Banks within the Financial Select Sector SPDR ETF (XLF) fell 5.5%. Banks constitute ~48% of XLF. Diversified banks and regional banks were affected the worst within the banking subgroup, falling 5.8% and 5.6%, respectively.

All 21 banks within XLF posted negative returns during the week ended January 22. Fifth Third Bancorp (FITB), Bank of America (BAC), and Citigroup (C) were the worst performers during the week. They fell 9.7%, 9.5%, and 9.5%, respectively.

PNC Financial, US Bancorp, and J.P. Morgan were relatively better off among the banks in XLF. They returned -1.3%, 1.4%, and 2.2%, respectively, during the week.


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