Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
Blog Home
Bob Carey
Chief Market Strategist
Click for Bio

Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube

  An Update On The Recovery In Financial Stocks
Posted Under: Sectors

View from the Observation Deck  

  1. Financial companies have been in serious recovery mode since the 2008-2009 financial crisis. Financials, particularly the banks, were at the epicenter of the crisis. Financials actually peaked months before the crisis began. 
  2. As indicated in the table, the all-time high for the S&P 500 Financials Index was set on 2/20/07. From 2/20/07-3/6/09 (peak to trough), the index declined by 84% on a price-only basis (not including dividends), according to Bloomberg.
  3. Considering that the S&P 500 Index has posted 53 new all-time highs just in 2017, those investors still seeking value in the market may find it in Financials, especially the banks, in our opinion.  
  4. Regulatory changes have slowed the recovery process for banking institutions, in our view. In particular, the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law in July 2010.
  5. The basic premise of the law is to reduce the level of risk exposure in the U.S. financial system, especially with respect to banking institutions, in an effort to prevent another financial crisis.
  6. Just yesterday (11/14), the Senate reached a bipartisan agreement to relieve small and regional lenders of many of the most onerous rules imposed following the financial crisis, according to The Wall Street Journal. Stay tuned on this front. 
  7. The 2018 and 2019 estimated price-to-earnings (P/E) ratios on the S&P 500 Financials Index are 13.96 and 12.70, respectively, as of 11/14/17, according to Bloomberg. For comparative purposes, the 2018 and 2019 estimated P/Es for the S&P 500 Index are 17.59 and 15.98, respectively. 
  8. Bloomberg's 2018 and 2019 consensus earnings growth rate estimates for the S&P 500 Financials Index are 15.70% and 9.96%, respectively, as of 11/14/17, compared to 9.98% and 10.09%, respectively, for the S&P 500 Index. 

This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions and other expenses incurred when investing. Investors cannot invest directly in an index. The S&P 500 Financials Index is a capitalization-weighted index comprised of U.S. financial companies in the S&P 500 Index. The S&P 500 Financial Index Subsector Indices are capitalization-weighted and comprised of S&P 500 constituents representing a specific financial subsector. The S&P 500 Index is a capitalization-weighted index comprised of 500 stocks (currently 505) used to measure large-cap U.S. stock market performance.

Download a PDF of this post, please click here.
Posted on Tuesday, November 14, 2017 @ 2:54 PM • Post Link Share: 
Print this post Printer Friendly

These posts were prepared by First Trust Advisors L. P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
Market Commentary and Analysis
Market Commentary Video
Weekly Market Commentary
Weekly Market Watch
Monthly Talking Points
Quarterly Newsletter
Market Observations
Subscribe To Receive Email

US Stocks Ended Nov. 10, 2017
US Economy and Credit Markets Ended Nov. 10, 2017
A Year Later Most Of The Major S&P Stock Indices Are Deep In The Black
A Global Snapshot of Government Bond Yields
Is a Correction Coming?
US Stocks Ended November 3, 2017
US Economy and Credit Markets Ended November 3, 2017
How The S&P 500 Index Has Performed Since The Federal Reserve Began Hiking Interest Rates On 12/16/15
A Snapshot Of Major Emerging Markets Stock Indices
US Stocks Ended October 27, 2017
Skip Navigation Links.
Search by Topic
Skip Navigation Links.

The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial advisors are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA.
First Trust Advisors L.P.
Home |  Important Legal Information |  Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2020 All rights reserved.