Bank stocks are poised to hit a record year compared with the S&P 500 as investors are betting on the economic recovery to drive prices higher, the WSJ reported.
- The KBW Nasdaq Bank Index is up about 37%, exceeding the S&P 500 which is up 11%.
- The bank index plunged by nearly 14% and underperformed the S&P 500 by 30 percentage points in 2020.
- The KBW Nasdaq Regional Banking Index is even higher with a 38% growth so far.
- Investments in financial stocks have already set a full-year record in less than five months with $32 billion, according to Bank of America strategists.
- A strategist said investors were enticed into financials after lows recorded in 2020 when stocks were “out of favor and underweight.”
- Banks are also reaping the benefits of provisions for loan losses amid the COVID-19 pandemic, which have lessened as the economy started to recover.
- An analyst said financial stocks are still as cheap as they have ever been relative to the market, and investors are still trying to weigh their options.
BKX: Nasdaq is up 0.14%; while KRX: Nasdaq is down 0.0078%.