The Motley Fool article argues State Street’s Financial Select Sector SPDR ETF (XLF) could be attractive as interest rates rise: financial companies may benefit, and the fund trades at just over 15 times forward earnings, versus 20 for Vanguard’s S&P 500 ETF.
The article says the Fed raised its federal funds rate by 25 basis points this month, to a range of 3.75%–4%. Futures markets were pricing in roughly 75 basis points of additional increases by the June 2027 meeting. The article says wider spreads between loan and deposit rates can lift banks’ net interest income, and a steeper yield curve can also help.
Financial-sector earnings were expected to grow 15% in 2026 and 8% in 2027, according to the article. It cites Charles Schwab analysts pointing to upward earnings revisions, solid net interest income and improved capital-markets activity. The writer’s bullish view depends on economic growth remaining at least good.
