It's time to pick positions in bank stocks heading into year end as peak rates could be a "mini clearing event" for the sector, according to Bank of America.
"While we are careful to not [get] carried away, peak interest rates do have potential to serve as a mini clearing event for bank stocks," BofA's Ebrahim Poonawala wrote in a Sunday note.
Regional banks are down by 27% this year, and have continued to face intense scrutiny due to their exposure to commercial real estate.
"Best case, peak rates could mark near term bottom in bank stocks vs. S & P." To be sure, there remain issues in the sector.
Bank stocks are highly tied to the broader economy and their loans could take a hit if the U.S. falls into a recession.
Persons:
BofA's Ebrahim Poonawala, JPMorgan Chase, KRE, Poonawala, NIM, it's, Bryn Talkington, Talkington, Morgan Stanley, Bill Gross, Gross
Organizations:
Bank of America, Bank, Citigroup, JPMorgan, Regional Banking, P Bank, Federal Reserve, Capital Management, West Bancorp, Truist Financial, Citizens, Apple
Locations:
Wells Fargo, U.S