The U.S. financial sector roared to life Wednesday afternoon, with the Financial Select Sector SPDR Fund (NASDAQ:XLF) posting one of its strongest single-day gains in years, soaring 6.8% to $46.89.
What To Know: A surprise move by President Donald Trump announcing a 90-day suspension of tariffs on countries that have not retaliated against U.S. trade actions — a policy pivot that electrified markets.
The XLF, a bellwether ETF tracking major financial stocks in the S&P 500, was swept up in the broader rally, benefiting from surging optimism about global trade, interest rate expectations, and economic acceleration.
Top holdings like JPMorgan Chase & Co (NYSE:JPM), Bank of America Corp (NYSE:BAC), Wells Fargo & Co (NYSE:WFC), Citigroup, Goldman Sachs Group Inc (NYSE:GS) and BlackRock Inc (NYSE:BLK) surged alongside the fund as capital rotated aggressively into economically sensitive sectors.
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Why Financials Took Off Wednesday
1. Pro-Growth Signal Spurs Yield Rebound
Trump's tariff policy, while aggressive toward China, was unexpectedly conciliatory toward much of the world. By offering a temporary pause and a low flat-rate tariff to over 75 cooperative countries, the administration signaled a more stable international trade environment.
Markets appeared to interpret the shift as a pro-growth development, pushing bond yields higher — a direct benefit to banks that profit from wider interest rate spreads.
The benchmark 10-year U.S. Treasury yield jumped nearly 20 basis points Wednesday afternoon, steepening the yield curve. For banks, this steepening improves profitability on loans and investments.
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2. Financials as a High-Beta Trade
As risk appetite returned, financials were among the most aggressively bought. The sector is considered high-beta — it tends to outperform when markets are bullish and underperform during risk-off conditions.
With volatility collapsing (the VIX fell around 30%) and equities ripping to fresh highs, institutional money flowed back into financials after months of underperformance.
3. Relief from Global Uncertainty
Though Trump's rhetoric toward China was anything but soft, his praise for non-retaliating countries and the 90-day trade reprieve reduced uncertainty for multinational institutions.
Global banks and asset managers — like Morgan Stanley, Goldman Sachs and BlackRock — likely gained on expectations of increased cross-border capital flows and fewer disruptions in foreign markets.
According to data from Benzinga Pro, XLF has a 52-week high of $52.63 and a 52-week low of $39.54.
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