Latest news with #SPDRS&PRegionalBankingETF
CNBC
30-07-2025
- Business
- CNBC
Wall Street sets sights on Fed announcement that could jolt market
Investors on Wednesday got some strong earnings as well as new data showing the U.S. economy is still rocking despite uncertainty around tariffs. Wall Street didn't seem to care. Stock futures were about flat after the government reported U.S. gross domestic product expanded at a 3% annual rate in the second quarter. That was well above the Dow Jones consensus of 2.3%. At the same time, Humana , Hershey , Kraft Heinz and Mondelez all posted better-than-expected profits since Tuesday's close. What does that non-reaction to positive news tell me? Wall Street has its sights set on the Federal Reserve. The Fed is set to give its latest monetary policy decision at 2 p.m. And while the central bank is almost universally expected to leave its overnight lending rate unchanged at 4.25% to 4.50%, investors will still comb through the statement for clues on future policy moves. Fed Chair Jerome Powell's news conference at 2:30 p.m. ET also adds intrigue to the meeting. As CNBC's Jeff Cox points out in his preview, this will be the first Fed announcement since Donald Trump's visit to the Fed's construction site after the president raised concern over cost overruns on the project. Expect the central bank chief to field questions on that front. On top of that, the Fed has signaled concerns that Trump's tariffs could yet drive inflation higher. "Powell has no easy job with the labor market showing some holes, though prices are still well above his sustainable 2% target and financial conditions are as easy as can be. It would suit Powell again to be non-committal ahead of the September meeting as there remains plenty of time between today and then for him to decide," wrote Peter Boockvar, chief investment officer at One Point BFG Wealth Partners. Watch regional banks Given the anticipation heading into the Fed announcement, the broader market could see sharp moves in either direction after 2 p.m. One group to keep an eye on, according to Goldman Sachs, is regional banks. "We observe that the U.S. banking ETFs (KBE, KRE) have seen unusually large moves on FOMC-day since 2023," wrote John Marshall, head of derivatives research at Goldman. The SPDR S & P Regional Banking ETF (KRE) has averaged a 2.5% move in either direction on Fed days over the past two years. Marshall noted the KRE could also jump after today's decision. "Despite the rally in U.S. financial stocks since their April lows we find that regional banks continue to lag their normal relationship with macro assets. We note the 14% discount currently for the KRE ahead of FOMC," he said.
CNBC
21-07-2025
- Business
- CNBC
Navigating earnings risk in megacap tech, and a buying opportunity in this industrial name
(This is a wrap-up of the key money moving discussions on CNBC's "Worldwide Exchange" exclusive for PRO subscribers. Worldwide Exchange airs at 5 a.m. ET each day.) Investors are looking for opportunities in a midcap industrial name and the financial sector. They are also looking for a way to navigate megacap tech earnings. Worldwide Exchange Pick: IEX Drew Pettit of Citi likes Idex as a way to play the spending bill President Donald Trump recently signed into law. "Idex is a small and midcap industrial company, pump valve and metering name that plays to a lot of secular themes like water, oil and gas, agriculture all supported by the 'One Big Beautiful Bill,'" Pettit said. Pettit said he's seeing broader opportunities in small- and midcap cyclicals due to a valuation discount. Idex shares are down year to date. The company reports earnings on July 30. Worldwide Exchange Pick: Financials Mark Smith of Wells Fargo sees opportunity in large cap financials. "Large Cap financials have some potential upside due to possible deregulation coming out of the executive branch this year," Smith said. "Financials are the place to be right now if you want to see outsized gains and remember they are tariff talk free, US financials don't get affected by any of this." The Invesco KBW Bank ETF holding the largest U.S. bank stocks and the SPDR S & P Regional Banking ETF that holds regional banking stocks are both outperforming the market since the Trump Administration's April 2 tariff announcement. Earnings risk in megacap tech With the Nasdaq Composite trading at an all time high and the Roundhill Magnificent Seven ETF within 1.5% of its record, Angelo Zino of CFRA is highlighting the risk to the megacap tech trade with Tesla and Alphabet reporting earnings this week. Last week, Netflix beat estimates for revenue and earnings, but the stock closed lower the day after reporting. "Our view is you are going to need a notable 'beat and raise' across the board here for the most part, outside of an Alphabet where the expectations, valuations are a little bit more reasonable in nature." He added: "If you can hear some of these companies talk about accelerating growth tied to AI, a guy like Zuckerberg at Meta … if he talks about accelerating growth here over the next 18-24 months I think that's where the stock could potentially go higher."
CNBC
14-05-2025
- Business
- CNBC
Buy these dividend-paying regional bank stocks, Truist says
Large banks have many advantages over smaller counterparts, but several regional bank stocks remain standouts, according to Truist. Plus, they pay solid dividends. Bank stocks have largely reversed course after sinking on President Donald Trump 's tariff policy announcement in early April. The SPDR S & P Regional Banking ETF has seen four consecutive weeks of gains and is up about 5% so far this week. Yet the ETF is still down nearly 2% year to date. KRE YTD mountain SPDR S & P Regional Banking ETF in 2025. In this environment, Truist is being selective when it comes to small- and mid-cap (SMID) banks. "Amidst the uncertain macro backdrop, we favor a mix of names with outsize[d] organic growth opportunities driven by differentiated business models and/or footprint, potential to be disciplined participants in an eventual M & A revival, and leverage to positive cyclical trends as balance sheets turn over," a team of analysts led by David Smith wrote in a note on Monday. Since SMID-cap banks rely on customer relationships within a smaller geographic footprint, investors can look at differing economic conditions across the country, the analysts said. Here are four names Truist rates a buy, one in each geographic region. Old National Bancorp , in the Midwest, has a 2.49% dividend yield. The Evansville, Indiana-based bank recently closed its merger with Bremer Financial, expanding its footprint into new markets across Minnesota, Wisconsin and North Dakota, analyst Brian Foran said. "The bank has a good track record on meeting and beating targets of previous large deals, and we see a path of maintaining mid-to-high teens [return on tangible common equity] and getting efficiency ratio below 50s, with more than 20% EPS accretion in 2026 generated from Bremer integration," he wrote. Shares are up 4% so far this year. Foran's $26 price target suggests nearly 16% upside from Tuesday's close. In the Northeast, Webster Financial is one bank that Smith likes. He has a price target of $61 on the stock, implying 15% upside. Headquartered in Stamford, Conn., the bank's footprint spans from New York to Massachusetts, he noted. It is one of the more profitable in his research universe, with its efficient operations and low-cost, diversified funding base, he said. "Webster also boasts some niche lending businesses and high capital levels, though we expect more focus on organic growth or buybacks near term," Smith wrote. "Although higher [commercial real estate] concentration and slower growth markets are concerns, we view them as offering diversification and see a compelling valuation." The stock yields 3.03% and has lost 3% year to date. With Synovus Financial , investors get a dividend equal to a current yield of 3.15%. The bank, headquartered in Columbus, Georgia, is in the middle innings of a self-improvement journey, analyst John McDonald said. It has an attractive footprint across five states in the Southeast, with 70% of its markets in high growth areas, he said. "The bank has streamlined its structure and slimmed exposures, and is now executing on organic expansion while delivering more consistent credit quality," McDonald wrote. "Stock trades at a valuation discount, and current profitability/franchise value offers an opportunity to shed legacy perceptions through consistent execution." He has a $56 price target on Synovus, suggesting it can move 13% above Tuesday's close. Synovus Financial is down 3% so far this year. Lastly, Western Alliance Bancorp , whose dividend equals a 1.91% dividend yield, is one of the fastest growing banks based on internal growth rather than mergers and acqusitions, Smith said. Headquartered in Phoenix, Western Alliance has shifted from a real-estate heavy, community bank to a diversified commercial bank with numerous niche businesses that provide attractive profit margins, he noted. "While above-average CRE and office concentration, coupled with a poor [global financial crisis] loan loss performance, give some investors concern on credit, WAL has transformed its balance sheet," Smith wrote. "Following a considerable liquidity & capital build after the bank was caught up in the March Madness of '23 that saw its industry-leading returns dip, Western Alliance is poised to once again be among the more profitable midsize banks." Truist's 12-month price target of $92 suggests 15.5% upside from Tuesday's close. The stock has slipped 4% year to date.
