Bank Investors Keep Taking Profits, No Matter the Earnings Beat
(Bloomberg) -- Buoyant profits at banks aren’t good enough for investors.
For a third day, the KBW Bank Index trailed the market, sending a ratio tracking its relative return to the S&P 500 to the lowest since November. Goldman Sachs Group Inc. slipped 1.1 percent as of 12:10 p.m. in New York for the second-worst performance in the Dow Jones Industrial Average, the latest financial firm to suffer a shares loss despite better-than-expected profits.
Analysts have pointed to things from sluggish loan growth to Goldman’s higher-than-expected expenses as reasons to caution against an industry whose return since the 2016 U.S. presidential election has topped all but one other industry. Driven by optimism over easier regulation and tax cuts, financial shares have rallied almost 40 percent since November 2016, compared with 27 percent for the S&P 500.
The stalled leadership in financials is in contrast with tech stocks, where Netflix Inc. led a rally in Internet shares amid better-than-expected subscriptions. The FANG block of Facebook Inc., Amazon.com Inc., Netflix and Google climbed 4.3 percent Tuesday, the most since January. The Nasdaq 100 Index jumped 2 percent, almost double the gain in the S&P 500.
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