Bank Stock Bulls Ready to Charge Again as Trump Bump Winds Down

Lenders aren't outperforming anymore, but that could be an opportunity, says Goldman.

Author:: Kinsey Grant
Publish date:: Sep 13, 2017 11:04 AM EDT

After outperforming macro variables tied to bank fundamentals by a hearty 12% following President Trump's election, financial stocks have handed over some of their gains and now underperform at about 4%, according to Goldman Sachs equity-derivatives strategists, Bloomberg reported.

When Trump was elected, the promise of tax and regulatory reform sent bank stocks surging. But after eight months in office, Trump has accomplished little legislatively. The recent decline in bank stock performance could suggest that the market might not be pricing in reform potential, Goldman wrote.

This winding down of the Trump Bump for financial stocks leaves room for bank bulls to get in on the action, Goldman suggested. Bank stocks enjoyed a small rally Tuesday as Treasury Secretary Steven Mnuchin promised tax reform by the end of the year.

Major banks including Wells Fargo & Co. (WFC) - Get Report , Bank of America Corp. (BAC) - Get Report , Citigroup Inc. (C) - Get Report , Goldman Sachs Group Inc. (GS) - Get Report and U.S. Bancorp (USB) - Get Report were all higher on Tuesday. The Financial Select Sector SPDR ETF (XLF) - Get Report increased 1.1% Tuesday before declining slightly Wednesday morning.