NEW YORK, July 11, 2026, 06:40 EDT
U.S. financial-sector funds picked up $1.04 billion in the week to July 8, but trading on Friday closed with big banks leading the sector and regional banks mostly flat. That inflow was just over 4% of the $24.97 billion U.S. equity funds got in total. The money came in before a week stacked with bank earnings.
This split is important because rising rates didn’t give banks a simple lift. From July 2 to July 10, both the two-year and 10-year Treasury yields climbed by seven basis points to 4.21% and 4.56%. The yield curve gap held at 35 basis points, not getting steeper.
A steeper curve usually boosts net interest margin, or what banks make on loans and securities minus what they pay for deposits and funding. But this week the curve moved up nearly in parallel. The outperformance seemed tied more to expectations for trading and deal fees than a broad move in lending spreads.
| Close-to-close, week ended July 10 | Return |
|---|---|
| KBW Nasdaq Bank Index | +1.68% |
| S&P 500 | +1.23% |
| Financial Select Sector SPDR Fund (NYSEARCA:XLF) | +0.16% |
| SPDR S&P Regional Banking ETF (NYSEARCA:KRE) | 0.00% |
Market data as of Friday close.
FactSet’s earnings estimates point to mixed results again. The firm sees S&P 500 financials reporting a 6.6% jump in Q2 profit from a year ago, ranking eighth out of 11 sectors. Forecasts for companies within the sector range from a 30% gain down to a 10% drop.
| Financial industry or sub-industry | Expected Q2 earnings growth |
|---|---|
| Investment banks and brokers | +30% |
| Regional banks | +17% |
| Diversified banks | +11% |
| Payments and processing | +4% |
| Insurance | -3% |
| Consumer finance | -10% |
FactSet put together the year-on-year estimates.
Goldman Sachs NYSE:GS outperformed, climbing 3.35% from the July 2 close through Friday. By comparison, JPMorgan Chase NYSE:JPM added 0.60% and Citigroup NYSE:C was up 0.59%. The gap lines up with investors sticking with capital-markets plays like trading, underwriting, and M&A advice – not just the broad bank sector.
The fee story isn’t only about outperformance. Global investment-banking revenue climbed 24% to $61.4 billion in the first half, while trading revenue at the biggest global banks is on track to jump at least 15% from a year ago, Dealogic and Coalition Greenwich data show. “Equities is set to be the primary engine of growth across global markets,” said Jamie Vickers, head of equities at Coalition Greenwich. Reuters
Tuesday packs the week’s events into the morning. JPMorgan is set to post results around 7 a.m. EDT, with Goldman following at 7:30 a.m. and Citi at 8 a.m. jpmorganchase.com June CPI data hits at 8:30 a.m. Federal Reserve Chair Kevin Warsh will testify before the House at 10 a.m.; PPI numbers are due Wednesday.
Michael Reynolds, Glenmede’s vice president of investment strategy, said geopolitical news, earnings reports, inflation figures and questions about the tech rally are “coming to a head all at once.” Reuters
The setup can flip fast. A strong inflation print, another oil jump after U.S.-Iran strikes, or rising deposit costs could wipe out gains from higher asset yields. Weak trends in credit cards or corporate loans would also challenge the view that fee growth shows economic health. “This is a high-bar quarter with a narrow margin of error,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. Reuters
The spread between the bank index and XLF after Tuesday will give the clearest read. If trading and advisory revenue come in above estimates but loan growth or credit quality miss, gains could stay focused. But if both lines show strength, last week’s $1 billion inflow may be just the beginning for financial stocks.
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