3 Banking Stocks With Further Upside Potential To Buy Now

The first quarter of 2017 ended on a positive note for the overall market. The banking stocks in particular, were investor favorites during this period. We are now eagerly waiting to see the financial performance of the banking stocks subsequent to the two rate hikes in three months and a gradually improving operating environment.

These along with positive developments on domestic and global fronts helped the overall market rally. The Dow Jones Industrial Average, NASDAQ Composite index and S&P 500 rose 3.9%, 8.9% and 4.7%, respectively, in the first quarter.

Before we check out how the earnings are expected to be for the banking stocks, let’s first dig into the factors that influenced the banks.

Factors at Play

Unlike the past couple of years, 2017 began on a positive note for the banks, as the Federal Reserve announced rate hike in mid-Dec 2016. Apart from this, an improving economy and the Fed’s projections of three rate hikes kept the optimism alive.

Additionally, President Trump’s promises of easing regulatory restrictions and lower tax rates supported the bank rally. Also, mortgage rates continued to move higher as money was pulled out of the bond market and yields on 10-year Treasuries climbed.

Moreover, the Fed’s announcement of a rate hike in March further reinforced the banking stocks’ financial performance in the quarters ahead. But speculations of delayed implementation of Trump’s financial policies as well as rise in bond prices led to a sell-off in the banking stocks in the latter half of the month.

This marginally dampened the overall performance of the stocks in the quarter. S&P Regional Banks Select Industry Index and SPDR S&P Regional Banking ETF (KRE - Free Report) ended the quarter in red, with both recording a fall of over 1.7%.

Earnings Projections for Q1

Nonetheless, one should not worry too much about this dismal price performance. Improved earnings results along with favorable operating backdrop will continue to support banks’ financials.

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