Financial Stocks Are Now Red For 2017, But Some Analysts See More Pain Ahead

Financial stocks were the initial beneficiary of the "Trump rally" but have now lost all momentum, and many notable names are even trading in the red for 2017. For example, shares of JPMorgan Chase & Co. JPM are now lower by nearly 5 percent since the start of 2017; Goldman Sachs Group Inc GS is lower by more than 11 percent. Financial stocks were higher by more than 9 percent going back to the beginning of March, a CNBC "Trading Nation" segment noted. But now that the sector has given up all of its gains and then some, is it a time to buy the dip?

Expert's Take

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Max Wolff of 55 Institutional was a guest on the "Trading Nation" segment and explained why he isn't a buyer right now. Many investors thought financials would be a winner from economic growth, reflation around the world, deregulation, along with interest rate and balance sheet normalization.

Yet here we are months into President Donald Trump's administration and the investment thesis derived immediately following the election might not hold true today. In fact, financial stocks may have "leap-frogged into aggressive space" in hopes of support from White House policies, particularly in areas such as economic growth and deregulation which remains uncertain.

"We still don't have clarity," Wolff said in reference to future policy changes. "Getting closer — but not quite there yet."

Since Election Day, Financial Select Sector SPDR Fund XLF is up 16.57 percent; year to date, the ETF is up just 0.17 percent.