The State Street Financial Select Sector SPDR ETF rises over 8% since June, outpacing the flat S&P 500 amid higher-for-longer interest rates.
Financial stocks, including Bank of America, JPMorgan Chase, and American Express, have rallied more than 8% since early June, as measured by the State Street Financial Select Sector SPDR ETF. The S&P 500 remains nearly unchanged over the same period, highlighting a rotation away from previously dominant tech names.
The shift follows a prolonged stretch of underperformance for financials, while growth stocks like Alphabet and Microsoft weighed on the Roundhill Magnificent Seven ETF, which fell nearly 4%. Analysts attribute the move to expectations of higher-for-longer interest rates, with the Fed Funds Rate holding above 3.5%—its highest level in 17 years.
Investors are reallocating capital from AI-driven growth stocks to financials, betting on sustained elevated rates as a tailwind for the sector.