Big Banks Power Up: JPMorgan, Goldman Sachs, Morgan Stanley Strengthen Financial ETFs

Financial-sector ETFs rebounded as gains in major Wall Street banks and dealmakers helped blunt the lingering policy noise, underlining the sector’s resilience after a volatile start to the week. • State Street Financial Select Sector SPDR ETF stock is trading near recent highs. Where are XLF shares going? Shares of JPMorgan Chase & Co (NYSE:JPM), Goldman Sachs Group Inc (NYSE:GS), Morgan Stanley (NYSE:MS) and Citigroup Inc (NYSE:C) all rose meaningfully on Thursday, bolstering broad financial ETFs despite ongoing rattlings from President Donald Trump‘s comments earlier in the week about credit card interest rates. Trump criticized credit card issuers for charging high interest rates, floating the idea of capping rates at 10%. While the proposal would likely require approval from Congress and remains far from certain, the comments were enough to rattle investors already sitting on strong gains from 2025. Those comments briefly weighed on bank stocks, but investors seemed to refocus on earnings strength and improving fundamentals across large-cap financials. The State Street Financial Select Sector SPDR ETF (NYSE:XLF), which has declined sharply in recent days, got a boost from its heavy exposure to JPMorgan, Goldman Sachs and Morgan Stanley. The Vanguard Financials ETF (NYSE:VFH) and the iShares U.S. Financials ETF (NYSE:IYF) also benefited as diversified banking and capital markets names saw strong gains, highlighting renewed confidence in the earnings outlook of the sector. Much of the optimism has been driven by strong results from Wall Street's dealmaking franchises. Goldman Sachs and Morgan Stanley capped one of the strongest investment banking years since the COVID-19 pandemic, fueled by robust merger activity, equity underwriting and record trading revenues. Goldman reported double-digit profit growth in the fourth quarter, while Morgan Stanley posted record full-year revenues and net income, supported by a sharp rise in equity trading and advisory fees. For ETF investors, the recent move underlines how diversified financial ETFs can soak up short-term headline risk. While more targeted bank ETFs, such as the Invesco KBW Bank ETF (NASDAQ:KBWB), remain more sensitive to regulatory or political developments tied to consumer finance, broader funds blend investment banks, lenders, insurers and asset managers — things that allow gains in one segment to offset weakness in another. The fund gained almost 2% on Thursday. As a result of expected deals and a boost in trading revenues, major financial institutions have been a stabilizing element again. For investors in ETFs, since a rebound is underway, it is now indicated that earnings momentum in major players on Wall Street may be a catalyst for financial ETFs. Photo: Shutterstock