The Zhitong Finance App learned that according to data from DataTrek Research, financial stocks in the S&P 500 index have performed better than the overall US stock market in the past year. This rise reflects the positive views of stock market investors on the economy.

Nicholas Colas, co-founder of DataTrek, said in a report on Tuesday: “We are still optimistic about the financial sector. Even if you don't choose oversized financial stocks, their continued rise is a welcome sign that the market remains confident about further economic growth.”

According to FactSet, the Financial Select Industry SPDR Fund (XLF.US), which tracks S&P 500 financial stocks, rose 31.1% in the past 12 months to Monday, while the S&P 500 index rose 22.7% during the same period.

Since 2024, the US stock market has continued to rise, and the economy continued to expand in the second quarter. However, investors still seem uneasy that the Federal Reserve may be too tight on monetary policy, triggering an unnecessary recession. The market generally expects the Federal Reserve to cut interest rates next week. Until now, the Federal Reserve has maintained high interest rates to curb the economy and reduce inflation.

“The Atlanta Federal Reserve's GDPNow model continues to reflect strong economic growth in the third quarter,” said Colas. He mentioned that the current economic growth forecast is 2.5% and said that since the beginning of the quarter, the GDPNow forecast has remained at 2% or more.

Colas also stated, “The financial sector is not just banks; banks only account for 25% of the index. The sector also includes many companies with strong growth cycles, such as Visa (V.US) and Mastercard (MA.US), as well as asset management giants such as BLK.US (BLK.US) and Blackstone (BX.US).”

The performance of the US financial sector in the past 12 months has surpassed the S&P 500 index. As of this Monday, SPDR funds in the financial selection industry have risen 19.6% this year, far exceeding the 14.7% increase in the S&P 500 index over the same period.

Despite the good performance of financial stocks over the past year, their excess earnings of 8.4 percentage points were “still poor” compared to the previous mid-economic cycle. For example, between 2017 and 2018, excess earnings on financial stocks were as high as 20 percentage points.

On Tuesday, the financial sector of the S&P 500 fell sharply, and bank stocks did not perform well. Federal Reserve Vice Chairman Barr said that US regulators will make drastic changes to their banks' capital rule proposals, which will cut the expected impact on the largest banks in half and eliminate most of the measures taken by smaller banks. According to FactSet data, J.P. Morgan Chase (JPM.US) closed down 5.19%, Goldman Sachs Group (GS.US) closed down 4.39%, and Citigroup (C.US) fell 2.67%. Investors are waiting for the latest inflation report to be released on Wednesday, and the US Bureau of Labor Statistics will release consumer price index (CPI) data for August.