The S&P 500 bank index has fallen almost 25 per cent so far this year compared with a drop of roughly 19 per cent for the benchmark S&P 500. Investors will get more insight into the health of the sector when the country’s largest banks start reporting their second quarter earnings.
Fed rate hike
Lenders tend to profit from higher interest rates, but investors have dumped bank stocks on concerns that Federal Reserve rate hikes aimed at taming inflation will slow the economy, hurting loan growth and increasing credit losses. “It really depends on your view of the economic outlook for 2022 and 2023,” said Mike Cronin, investment director at asset manager abrdn in Boston, noting investors are starting to price in a risk of recession.
“If you look out past a recessionary scenario into 2024, there is some real potential upside in the group. We’re cautious on the near-term but seeing value in the long-term.”
Second quarter…
