Have Banking Stocks Joined the Rally and What Does

In one of our previous weekly articles we mentioned that despite the recent bullish momentum on the major stock indices, the financial sector, especially the banking industry, was still weighing on consumer confidence, failing from climbing higher. One must note that according to the Federal Deposit Insurance Corp. four more banks failed over the weekend, bringing the tally up to 93 bank failures, since the beginning of the recession.

Despite the downbeat sector, investors are now looking past the current situation, driving the indices much higher. Last week was characterized by additional buying, as the S&P500 cleared its major resistance level of 950 points. Even though the momentum died down, during Tuesday’s and Wednesday’s sessions, Thursday showed a completely different ball game, as investors drove the indices to higher levels, prior to the release of the gdp result.

After a depressing last quarter, the revised gdp figure showed that the U.S economy had shrunk by only 1%. The result shocked investors during Friday’s session and helped to restore confidence into the markets. Friday’s session closed in positive territory sending the S&P higher, to close the week with a 0.84% gain. Furthermore, according the Commerce Department, the bigger news was the smaller decreased in business investment, exports and inventories. Even though the gdp result showed a better than expected result, Friday’s session was capped as personal consumption plunged by 1.2%, showing that consumers are not yet confident to go out and purchase goods, to help stimulate the economy.