PayPal’s 30% surge and strong earnings drove financials to outperform the S&P 500, which fell 0.8% in July.
The State Street Financial Select Sector SPDR ETF (XLF) climbed 6.32% in July, marking the strongest performance among S&P 500 sectors. The broader S&P 500 index declined 0.81% over the same period, with financials ranking as the second-best sector.
Gains were fueled by robust earnings, a rotation out of AI-related stocks, and strength in payments, exchanges, and insurance. Mergers and acquisitions activity, particularly in payments and exchange operators, also played a key role in the sector’s rally.
PayPal’s 30% jump was a standout, driven by strong quarterly results, an improved outlook, and takeover speculation. The stock’s rebound eased concerns about its turnaround progress and AI-related competition.