Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

S&P financials index may be bruised but not without bright spots

Stock MarketsOct 28, 2020 05:15PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. The New York Stock Exchange is pictured

By Sinéad Carew

(Reuters) - Financial stocks have lagged the broader equity market since the start of the year and since the late March crisis-low. But not all stocks are created equal in the S&P index that tracks the industry, which is down 23% year-to-date.

In fact, so far in 2020, the lead performers of the S&P 500 Financial sector (SPSY) have even outperformed the high-flying Nasdaq (IXIC), which is up almost 23% year-to-date. The S&P 500 is up 1%, and the Dow is down 7% for the year so far.

The sector's wide performance disparity stems partly from low interest rates exposure versus trading exposure in a market that has risen sharply since March.

Stocks that have performed well include exchanges, index companies or banks with trading desks or M&A advisory businesses and some insurance companies, said Aaron Dunn, co-director of value equities and portfolio manager at Eaton Vance (NYSE:EV).

"The ones relying on the yield curve and the short rates to make money have been more challenged," Dunn said, referring to banks that are mostly dependent on a steep yield curve to boost profits from their loan business.

While many stocks in the sector are relatively cheap, some investors are wary of economic uncertainty because of the coronavirus pandemic and the Federal Reserve's suggestion it will keep rates low for a long time.

"If you expect the economy to grow and interest rates to start to rise, then banks are very compelling," said Fred Cannon, head of research at Keefe Bruyette & Woods. "If the economy continues to grow and the Fed is successful at keeping rates very low you probably would be better off in exchanges and the banks that don't earn all their income from spread lending."

The leader of the financials pack is trading platform Marketaxess (O:MKTX) up 46% year-to-date, followed by MSCI (K:MSCI), up 32%, and then insurer Progressive (N:PGR), up 26%.

In all, eight stocks in the index, which has more than 60 stocks, have shown double-digit percentage gains so far in 2020. Other outperformers include investment managers Blackrock Inc (N:BLK) and T Rowe Price (O:TROW) and stock exchanges, Nasdaq Inc (O:NDAQ) and Intercontinental Exchange (N:ICE). Like MSCI, stock index company S&P Global Inc (N:SPGI) has also been in favor.

On the other end of the spectrum, Wells Fargo (N:WFC) was leading losses down 60%, followed by Citigroup (NYSE:C)'s more than 48% year-to-date decline and Lincoln Nationals (N:LNC) roughly 44% drop.

In all, 47 of the index's stocks have shown declines in the double-digit percentage range.

Compared to the broader financial sector the bank subsector <.SPXBK> has fallen 37% so far this year while the insurance subsector <.SPXIN> has dropped 18%.

While the financial index has risen almost 34% since the market's March 23 low, this gain compares with a 46% jump from the S&P 500, and an almost 43% gain for the Dow and a roughly 60% gain for Nasdaq.

S&P financials index may be bruised but not without bright spots
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email