Chris Senyek, chief investment strategist at Wolff Research, said investors should buy financial stocks as the Federal Reserve begins to cut interest rates. Senyek said greater upward pressure on long-term yields would benefit financial stocks. “We’re telling investors, you want to be overweight financials,” Senek told CNBC’s “Squawk on the Street” on Monday, adding that the sector was a “hidden bull market beneath the surface.” The industry is up 18.1% this year, slightly ahead of the S&P 500’s 17.8% gain. The Financial Select SPDR index hit a record high on Monday after rebounding from August’s selloff. The S&P 500 has yet to fully return to its previous record. Senek emphasized that Goldman Sachs is a leader in the financial world. He noted that the stock will rise more than 30% in 2024, outperforming most of the “Big Seven” stocks. Goldman Sachs outperformed the seven-stock group, with the exception of Nvidia and Meta Platforms. GS .SPX Year-to-date Goldman Sachs vs. S&P 500 performance in 2024 “We’re going to be buying financials here and now, and the yield curve is going to get steeper,” Senyek said. A steeper yield curve means long-term interest rates exceed short-term rates, which is a more favorable environment for banks’ loan margins. Steepening would reverse the inverted curve of the past two years. Other notable large bank stocks that have outperformed the market this year include JPMorgan Chase & Co. and Citigroup Inc., which are up 28.5% and 20.3%, respectively. 2024 KRE YTD Mountain Regional Bank ETF Regional banks have also moved higher recently on expectations of a lower interest rate environment. While the SPDR S&P Regional Banking ETF is up just 9.7% in 2024, it’s up more than 17% so far this quarter.
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