Bank stocks could be in for a rally as the market prepares for a possible June interest-rate hike and oil prices improve.
The financial sector has been beaten down in 2016 as market volatility took a bite out of investment banking and capital markets activities, while low oil prices have hurt those banks with exposure to energy loans.
The KBW Bank Index is down 3.7% this year, but on Wednesday, the index jumped nearly 2%. (The index was down about 0.9% at last check.)
TheStreet's Jim Cramer said Wednesday's rally in the financial markets could be pushed higher if "Janet Yellen says the right thing" as the market prepares for a potential June interest rate hike. Minutes from the Federal Reserve monetary policy committee's most recent meeting, chaired by Yellen, showed members actively considering an increase next month, a move the market hadn't expected until later in the year.
"These are how real rallies start, on nothing," Cramer said Wednesday. "And then we find out why."
So which bank stocks are outliers this year? Using a Bloomberg equity screen of U.S.-domiciled banks with market caps above $5 billion, here are the five best-performing bank stocks this year by total return. (Year-to-date total return are as of market close on May 25.)