By Dr. Carla Pasternak
Fed Chair Janet Yellen this month told Congress a December interest rate hike is a "live possibility" and October's job numbers boosted that possibility to 72%, according to recent Fed Funds futures pricing. Bank stocks are rising as the possibility of the first rate hike in nearly a decade is becoming a reality. Regional bank stocks, like Income Investor portfolio holding Arrow Financial (AROW), surged nearly 9% in the past couple of months, as measured by SPDR S&P Regional Banking ETF (KRE). Larger U.S. banks tracked in the iShares US Financials (IYF) are also gaining momentum, rising over 4% versus only 3% for the broader S&P 500.
Year-to-date, financials in the S&P 500 have underperformed the benchmark index. But prospects of rising interest rates have put financials into overdrive, as one of the top three performing S&P 500 sectors in the past month.
That's because rising rates could be ... Log in or subscribe to continue reading.