Bank Stocks Rebound Above 200-Day Average As Earnings Propel Dip Buyers

Wall Street kicked off the week with a rally in financial stocks, fueled by upbeat bank earnings and renewed risk appetite following Donald Trump‘s surprise decision to exempt new tariffs on critical tech products from China.

The Financial Select Sector SPDR Fund XLF climbed 1.6% to $47.42 by 10:10 a.m. ET, breaking above its 200-day moving average for the first time since November 2023—a move often seen by traders as a potential bullish signal.

The sector needs to climb another 4% to fully recover the losses it incurred after the April 2 tariff announcement.

See Also: Goldman Sachs Cheers China Tariff Exemptions, Lifts Earnings Forecasts For Apple, Dell, HP

Goldman Sachs Delivers A Strong Beat

The improved sentiment in financial sector’s rally was led by Goldman Sachs Group Inc. GS, which rose 1.1% after reporting robust quarterly results that beat Wall Street expectations on both revenue and profit.

For the first quarter of fiscal 2025, Goldman posted earnings per share of $14.12, up from $11.58 a year ago and well ahead of the $14.761 billion revenue consensus. Key revenue drivers included equities trading, which brought in $4.19 billion versus an expected $3.8 billion, and net interest income of $2.90 billion, comfortably above the $2.28 billion forecast.

The firm also announced a massive share buyback authorization of up to $40 billion, sending a strong signal of confidence in its balance sheet and forward earnings power. Loans reached $210 billion, topping the $197.61 billion estimate, while total deposits rose 8.8% quarter-over-quarter to $471 billion.

CEO David Solomon says geopolitical volatility remains a headwind but struck an optimistic tone on trade policy. “I’m encouraged by Trump’s more gradual tariff process,” he added.

Broader Earnings Strength Buoys Sector

Stronger-than-expected results last Friday from JPMorgan Chase & Co. JPM, Wells Fargo & Co. WFC, BlackRock Inc. BLK and Bank of New York Mellon Corp. BK helped lift sentiment across the board.

JPMorgan maintains its 2025 net interest income guidance despite macroeconomic headwinds tied to trade and inflation.

Goldman analyst Richard Ramsden found this encouraging.

“JPM continues to be in strong strategic position for a wide range of economic conditions,” Ramsden said, highlighting the bank’s “best-in-class capital ratios and reserves,” Ramsden said in a note. He added that if the economy weakens, JPM should trade defensively, and if the outlook improves, the bank is likely to continue gaining market share.

Traders Eye Technical Breakout In Financials

The breakout in the XLF fund above its 200-day moving average could signal further gains ahead.

This level, long watched by technical analysts as a line between bullish and bearish territory, was last crossed from below to above in November 2023. Over the following one and two months, the sector gained 6.2% and 11.8%, respectively.

Key Gainers And What’s Ahead

Banking and insurance names led Monday’s charge. Among the top gainers in the XLF ETF:

• Citigroup Inc. C rose 3.6% to $63.86
• MetLife Inc. MET added 2.8% to $73.41
• Morgan Stanley MS gained 2.8% to $111.15
• Prudential Financial Inc. PRU advanced 2.76% to $101.56
• Globe Life Inc. GL climbed 2.56% to $122.56

Investors now turn their focus to Tuesday, when Bank of America Corp. BAC and Citigroup are scheduled to report their first-quarter earnings.

Strong numbers from these names could reinforce the bullish momentum in financials and potentially extend the rally through the week.

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