The once-hated financials have been on a tear higher since President-elect Donald Trump won the election, and several market experts see the rally continuing.
The Financial Select Sector SPDR Fund (XLF) is up about 17 percent since Nov. 8. However, it was down slightly on Thursday after Trump didn’t provide details on his highly anticipated tax and regulatory reform policies during his Wednesday afternoon press conference.
„If Trump can get these policies done, which we believe he can, lower taxes, lower regulation, some stimulus growth, some loan growth out there, these banks‘ earnings are going to go up materially,“ said Paul Miller, head of financial institutions research at FBR Capital Markets, on Thursday.
Several big banks are set to report earnings on Friday morning , including Bank of America , JPMorgan Chase and Wells Fargo .
What investors are really going to be focusing on is guidance.
„We’ve been hearing that there’s been some robust pipelines for loan growth that they could take guidance up tomorrow. If that happens, I think these stocks are going to move higher. We’re very bullish and think that this is a very great buying opportunity for all these names,“ Miller told CNBC’s “ Closing Bell. “
However, veteran trader Art Cashin pointed out that the bank CEOs won’t be able to give too many details given that they don’t know yet what Trump’s tax policy might look like.
„We’re not expecting a lot of clarity because we’re not getting it out of Washington,“ the floor director for UBS said in an interview with „Closing Bell. “
The sector’s postelection rally comes after it spent several years in purgatory, facing „vitriolic hatred“ after the financial crisis, Smead Capital Management CEO Bill Smead said.
„They are probably a little overdone in the short run, but coming off the hatred they’ve had, it could be a long haul to the upside,“ he told „Closing Bell. “
He specifically likes Bank of America. Miller agrees, noting that if Trump’s pro-business agenda takes hold, the bank will probably be the biggest beneficiary.
Kourtney Gibson, president of Loop Capital Markets, is buying any dips in financials.
„You get some interest rate hikes, you get Trump potentially rolling back some things with Dodd-Frank, I think the banks are incredibly well positioned,“ she told „Closing Bell. „
