Bank Stocks Could Be Big Winners Ahead of Potential Fed Rate Hikes

Bank Stocks Could Be Big Winners Ahead of Potential Fed Rate Hikes

Bank investors are ready for higher Treasury yields.

The S&P 500 financials sector edged up 5.4% last week, the first five trading days of January. That marked its best start to a calendar year since 2010. The gain was a stark contrast with the 1.9% pullback in the broader S&P 500 index.



Investors are betting that looming interest-rate increases will fuel profits in financials and make the sector more attractive than tech, one of the main contributors to last year’s rally. The KBW Nasdaq Bank Index rose 10% last week, the largest percentage gain since November 2020. The tech-heavy Nasdaq Composite fell 4.5% last week, the most since March 2020.





The S&P 500 financial sector slipped 0.3% Monday, much smaller than a 0.4% decline in the Dow Jones Industrial Average.





Last week’s surge came after the Federal Reserve signaled midweek that officials might raise rates as soon as March, faster than previously anticipated. By Monday, the yield on the 10-year Treasury note had jumped to 1.779%, its highest level since January 2020.



























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