9 stocks to watch: financial sector to outperform tech sector in 2024 "Trump trade" breeds mandate optimism
Amid growing expectations of deregulation, the financial sector's stock price is poised to rise 30% in 2024, outperforming the high-tech sector by 26%.
#fintech and #cryptocurrency companies could benefit significantly from clearer regulation under the Trump administration.
Since the beginning of the year, financial stocks have outperformed tech stocks, helped by a Trump-led rally on Wednesday that lifted banks and brokerages amid investor expectations of a favorable political climate for deregulation.
The SPDR Fund XLF Financial Sector Select Fund is up 30% in 2024, outperforming the SPDR Fund XLK Technology Sector Fund, which is up 26% this year.
The SPDR S&P Regional Banking #ETF KRE Small and Mid-Cap Banks ETF also performed well, rising 13% after the election results, coinciding with a rally in technology stocks. Financial stocks, which have lagged technology stocks for six of the past seven years, are now catching up, helped by deregulation and renewed #optimism about MandA.
With the Trump administration back in the White House, analysts expect a significant increase in financial sector mergers and acquisitions (MandA).
JP Morgan analyst Anthony Elian, CFA, says: Under the second Trump administration, a more favorable backdrop for MandA is expected, which could lead to an increase in activity in the financial sector after the lull of the past few years.
lower regulatory hurdles could pave the way for consolidation of smaller banks, while larger financial institutions are expected to benefit from increased capital market activity.
Devin Ryan, analyst at Citizens JMP Securities, emphasized that a Trump-led congressional sweep could significantly ease regulatory pressure on the broader financial and fintech sector.
Digital assets could be the biggest winners,
Ryan says.
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