The U.S. banking sector is currently experiencing a strong rally and, according to expert opinions, is not fully exhausted yet. Since the low point at the beginning of April 2025, the KBW Bank Index, which includes 24 large U.S. banks such as JPMorgan, Citigroup, and Wells Fargo, has impressively gained 38.1 percent – significantly more than the broad S&P 500 or the tech-heavy Nasdaq 100 during the same period.
Reasons for the Upward Trend
- Too Low Profit Expectations: Analysts consider the current earnings estimates for the sector to be too conservative.
- Valuation with Recovery Potential: Despite the strong price increase, the sector’s valuation is still deemed attractive.
- Importance for the Overall Market: Financial stocks account for nearly one-fifth of the projected earnings of the S&P 500 but have only a weighting of just under 14 percent in the index. This suggests further upside potential.
These factors ensure that investors continue to view the U.S. banking sector positively and bet on further price gains.
Robust Performance in the Dow Jones U.S. Banks Index
Additionally, the current trading data of the Dow Jones U.S. Banks Index demonstrates a robust performance with an increase of over 27 percent this year until early July. This underlines the picture of a dynamic sector with tailwind entering the earnings season.
For investors, this means concretely: Despite already strong rally, U.S. banks are still well-positioned – both due to their fundamental strength and favorable valuations and positive earnings forecasts.