# Why financials could win the second half

> Blowout bank earnings, rising rates and 15-year-low valuations make financials the sector to watch, plus five funds to play it.
- Title: Why financials could win the second half · Kiplinger
- Summary: Blowout bank earnings, rising rates and 15-year-low valuations make financials the sector to watch, plus five funds to play it. Financials are one of the few…
- Keywords: financials, etfs, banks, investing, ai buildout, win, second, half, Kiplinger
- Source: Kiplinger — https://kiplinger.com/investing/etfs/financial-stocks-are-set-up-for-success-here-are-5-funds-to-consider
- Published: 2026-09-11T11:45:00+00:00
- Read time: 1 min
- Topics: financials, etfs, banks, investing, ai buildout
## Earnings came in hot
Financial stocks grew quarterly earnings 18% year over year, says State Street's Matthew Bartolini. That beat what analysts expected by more than three times.

> strong, coming in at 18%
## Rising rates help banks
Most sectors dread rate hikes. Bank stocks tend to do the opposite and thrive as rates climb, which flips a market worry into a tailwind here.
## Cheap against the market
Price-to-earnings multiples for financials relative to the broader U.S. stock market sit at 15-year lows. You are paying less for faster earnings growth.
## One fund for the whole sector
The Financial Select Sector SPDR ETF (XLF) holds every financial stock in the S&P 500, from JPMorgan Chase and Goldman Sachs to Visa and American Express.
## The AI buildout pays banks
Corporate America may spend $1 trillion on AI capacity by 2027. That spending arrives as loans, IPOs and M&A deals, all of which land on bank income statements.

> The AI buildout has been conducive to earnings within the financial sector.
## Four ways to go narrower
Invesco KBW Bank (KBWB) and First Trust Nasdaq Bank (FTXO) and SPDR S&P Bank (KBE) lean into big and regional banks. SPDR S&P Capital Markets (KCE) targets brokers and exchanges.
## Key takeaway

Financials are one of the few sectors that get stronger when rates rise, and they are still cheap relative to the rest of the market.