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) , Bank of America Corp. (BAC) , Citigroup Inc. (C) , Goldman Sachs Group Inc. (GS) and U.S. Bancorp (USB) were all higher on Tuesday. The Financial Select Sector SPDR ETF (XLF) increased 1.1% Tuesday before declining slightly Wednesday morning.
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