PYPL, SCHW among top S&P 500 financial movers in Q3

Financial Select Sector SPDR Fund ETF (NYSEARCA:XLF), which tracks S&P 500 financials sector, witnessed a robust third quarter, rising 10.24% since the start of July.

The financials sector’s gain outpaced the S&P 500’s (SP500) rise of 5.25%. The heavyweight sector, which has been in focus, especially after the Federal Reserve delivered a supersized rate cut, counts Berkshire Hathaway (BRK.B), JP Morgan Chase (JPM) and Visa (V) among its top three holdings.

Industries Q3 Performance

Insurance saw the biggest rise in the sector, and rose 13.2%, insurance, Financial Services followed next and was up 11.93%, while banks were up 2.3% in Q3.

U.S. stock fund flows into and out of the financials sector have swung from week to week. The financials-focused ETF had a net flows of $762.6M as of September 26.

Top 5 movers in Q3

Gainers

• Erie Indemnity (ERIE) +48.9%
• PayPal (PYPL) +34.4%.
• Globe Life (GL) +28.7%.
• MarketAxess (MKTX) +27.7%.
• Blackstone (BX) +23.6%.

Losers

• Charles Schwab (SCHW) -12%.
• Franklin Resources (BEN) -9.8%.
• T. Rowe Price (TROW) -5.5%.
• Wells Fargo & Company (WFC) -4.8%.
• American International Group (AIG) -1.4%.

What Analysts Expect

Keefe, Bruyette & Woods had outlined the potential impact on financial stocks by Donald Trump likely launching leadership changes at federal regulatory agencies should he win back the White House.

Investors could eventually see outperformance by banks, consumer finance, brokers and title insurance stocks under a Trump administration.

Vice President Kamala Harris winning the presidency is likely to result in fewer makeovers in agency leaderships, analysts led by Matt Kelley, KBW’s director of research, said.

The outlook for XLF largely depends on the economy, and while there are valid concerns, it should hold up into next year. Furthermore, Q4 seasonality should add a tailwind, SA analyst MacroGirl said.

What Quantitative Measures Say

XLF received a Buy rating from SA quant system with 3.76 score. This comes in large part due to an C- grade in the category of risk. The stock, however, received high grades in other areas, with an B+ for momentum, B for dividends, A+ liquidity and A for Expenses.