Exchange-traded funds that buy bank stocks were jumping Tuesday as investors assessed Wall Street’s latest batch of second-quarter earnings results from giants including Bank of America and Morgan Stanley.
The Invesco KBW Bank ETF
KBWB,
was up 3% Tuesday afternoon, while the SPDR S&P Regional Banking ETF
KRE,
surged more than 4%, according to FactSet data, at last check. Morgan Stanley
MS,
was among the S&P 500’s best-performing stocks Tuesday afternoon, after reporting earnings that beat expectations even as its quarterly profit dropped from a year earlier, with its shares soaring 6.3%.
”It was a busy morning as Morgan Stanley posted mixed results, while Bank of America impressed,” said Edward Moya, senior market analyst for the Americas at Oanda, in a note Tuesday. “We are done with the majority of the big banks and the overall takeaway is that they did ok despite a weakening economy and all the turmoil that stemmed from the regional banking crisis last quarter.
The SPDR S&P Regional Banking ETF, which tracks an equal-weighted index of U.S. regional bank stocks, was on track for its best daily performance since June 6 , according to FactSet data. The fund has surged around 12% so far this month based on Tuesday afternoon trading levels, putting it on track for potentially its best monthly performance since February 2021, FactSet data show.
Banks stocks were broadly outperforming the S&P 500, helping to buoy the popular gauge of large-cap U.S. equities. The S&P 500
SPX,
was up 0.8% Tuesday afternoon, FactSet data show, at last check.
Bank of America
BAC,
whose shares were climbing more than 4% Tuesday afternoon after reporting better-than-expected earnings, and Morgan Stanley are among the biggest holdings of the market-capitalization-weighted Invesco KBW Bank ETF. As of July 17, JPMorgan Chase & Co.
JPM,
Wells Fargo & Co.
WFC,
and Goldman Sachs Group
GS,
were also among the fund’s top positions, according to its holdings data on Invesco’s website.
The Invesco KBW Bank ETF was also on track Tuesday afternoon for its best daily performance since early June, but the fund is still down double-digits so far this year.
Bank ETFs are bouncing from their 2023 lows hit in the wake of regional bank failures earlier this year that included Silicon Valley Bank’s collapse in March. The Invesco KBW Bank ETF remains down around 15% this year, while the SPDR S&P Regional Banking ETF has tumbled around 22% in 2023, based on trading levels on Tuesday afternoon.
Meanwhile, the S&P 500’s more than 18% gains this year have been driven by Big Tech stocks including megacap companies Apple Inc.
AAPL,
Microsoft Corp.
MSFT,
and Nvidia Corp.
NVDA,
but there have been signs of the rally broadening.
A fund that focuses on a version of the S&P 500 that equally weights the index’s stocks, the Invesco S&P 500 Equal Weight ETF
RSP,
is up slightly more than 2% so far this month. That’s similar to the rise of the cap-weighted S&P 500, which is heavily exposed to the tech sector.
The U.S. stock market was broadly trading up Tuesday afternoon, with the Dow Jones Industrial Average
DJIA,
climbing 1.1% and the Nasdaq Composite
COMP,
gaining 1%, according to FactSet data, at last check.
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