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The Fed’s signal that it will raise benchmark interest rates as soon as 2022 should further drive the financial sector’s growth. With the consumer price index rising 4% year-over-year, the odds of an interest rate hike are good.
Investors’ interest in the finance sector is evidenced by the Financial Select Sector SPDR Fund ETF’s (XLF) 37.1% year-to-date gains, versus the broader SPDR S&P 500 ETF Trust’s (SPY) 22.6% returns. Hence, we think it could be wise to bet on financial stocks possessing solid fundamentals—Capital One Financial Corporation (NYSE:COF), Flagstar Bancorp, Inc. (FBC), and Capital Bancorp, Inc. (CBNK).
