Exchange-traded funds focused on bank stocks are bouncing as investors appear to be wading back into the beleaguered banking sector amid strong trading volume in the ETFs.
The SPDR S&P Regional Banking ETF KRE was up around 2.8% Tuesday afternoon, while the SPDR S&P Bank ETF KBE gained 2.4% and the Invesco KBW Bank ETF KBWB rose 2.8%, according to FactSet data, at last check. Moody’s Investors Service said in a note dated March 13 that it changed its outlook on the U.S. banking system to “negative” from “stable,” reflecting “the rapid deterioration in the operating environment following deposit runs” at Silicon Valley Bank, Silvergate Bank, and Signature Bank as well as the failures of Silicon Valley Bank and Signature Bank.
“You’re basically using the ETF as a price discovery vehicle,” and to express investment views on the banking sector in a time of uncertainty, Sohn said by phone Tuesday. Investors and traders may be using the SPDR S&P Regional Banking ETF to make long or short bets or to hedge their positions, Sohn said. The fund saw $257 million of inflows Monday, the largest since March 2022, he said. On Friday, the day Silicon Valley Bank collapsed, the ETF had a “tiny” inflow of around $2.5 million, he added.