Financials Sector: Supported by Upward Revision in US GDP



Financials sector

After pulling back briefly on March 29, the financials sector regained strength and led the market rally on March 30. The S&P 500 Financials Sector rose 1.2% on Thursday. All five of its subcomponents closed positive. Most of the major companies in the financials sector closed above 1% on March 30.

Capital One Financial (COF), Huntington Bancshares (HBAN), and Fifth Third Banking (FITB) were the top gainers in the financials sector on March 30. The upward revision in 4Q17 US GDP growth improved the sentiment in the financials sector. Falling Treasuries and the rising US dollar also supported the financials sector.

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Optimism in the US economy

Recent comments by Fed officials supported the market. Although details of President Trump’s fiscal policy aren’t clear, the central bank is optimistic about US economic growth. Most of the Fed officials expect a minimum of two interest rate hikes this year. Eric Rosengren, the Boston Fed president, commented that four interest rate hikes in 2017 would be appropriate for the current economy. Charles Evans, the Chicago Fed president, is expecting one or two more interest rate hikes in 2017 due to strong fundamentals in the US economy.

JPMorgan Chase (JPM), a banking institution and leading global financial services firm, rose 0.88% on Thursday. The rally in the industry along with expectations of strong quarterly results from JPMorgan Chase supported the prices. JPMorgan Chase’s quarterly results are scheduled to release in two weeks. According to recent reports, JPMorgan Chase plans to expand in Dublin by purchasing a new office building that can accommodate 1,000 employees.

The market is looking forward to personal spending data and speeches by Fed officials scheduled for today to understand the economy’s strength.


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