Image: Bigstock

Financials stocks had unperformed the broader indexes earlier this year due to concerns that the Fed’s aggressive tightening campaign to tame inflation would push the economy into a recession.

Results reported by the six biggest US banks suggested that the economy could manage a “soft landing” while the Fed raises rates. Investors closely watch bank earnings since they are a good indicator of the health of the broader economy, consumers, and businesses.

Bank stocks have rebounded since mid-June as some investors believe that much of the bad news is already priced in and valuations look attractive at current levels.

The Financial Select Sector SPDR Fund (XLF - Free Report) is the most popular and one of the cheapest products in the space. It holds S&P 500 financial stocks. Berkshire Hathaway (BRK-B - Free Report), JPMorgan Chase & Co. (JPM - Free Report), and Bank of America (BAC - Free Report) are its top holdings.

The SPDR S&P Regional Banking ETF (KRE - Free Report) tracks an equal-weighted index of regional banks. The Invesco KBW Bank ETF (KBWB - Free Report) holds large money centers, regional banks & thrift institutions.

Video Length: 00:07:54

More By This Author:

Is The Worst Over For Tech Stocks & ETFs?
ETF Mid-Year Outlook & Investing Strategies
Why Long-Short ETFs are Beating the Market