Financial Select Sector SPDR Fund ETF (NYSEARCA:XLF), which tracks S&P 500 financials sector, has seen a slower second quarter and has fallen 1.9% since the start of April.
The financials sector’s gain lagged behind the S&P 500’s rise of 4.1%.
The sector, which showed consistent gains in the first three months of 2024, has failed to maintain that momentum into the second quarter of the year.
Industries Q2 Performance
Financial Services saw the biggest fall in the sector, and was down 3.1%, insurance followed next and fell 2.3%, while banks were up 1.5% in Q2.
U.S. stock fund flows into and out of the financials sector have swung from week to week. The financials-focused ETF had a net flows of $1.3B as of June 28.
What Are Top 5 movers in Q2
Gainers
Synchrony Financial (SYF) +9.4%
Arch Capital (ACGL) +9.1%
Goldman Sachs (GS) +8.3%
Moody’s Corporation (MCO) +7.1%
Bank of America (BAC) +4.9%
Losers
Globe Life (GL) -29.3%
MSCI (MSCI) -14%
PayPal (PYPL) -13.4%
Aon (AON) -12%
What Analysts Expect
SA analyst, Sensor Unlimited, downgraded the rating on the sector to Hold, and said, “together with its dividend decrease, the valuation has become expensive.”
“My other consideration for this downgrade is that now I see a reduced possibility of substantial rate cuts compared to ~1 year ago,” Sensor Unlimited added.
Another SA analyst, Real Investments, also expressed concern about the sector, and especially about the banking sector.
“The level of unrealised losses for banks has increased, indicating trouble in the sector. Commercial real estate is facing severe problems, which will be aggravated by high-interest rates,” Real Investments added.
What Quantitative Measures Say
XLF received a Buy rating from SA quant system with 3.93 score. This comes in large part due to an D+ grade in the category of risk. The stock, however, received high grades in other areas, with an A- for momentum, B for dividends, A+ liquidity and A for Expenses.
