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This Month's Bonus Content Financials Are Down Big This Year, but XLF Is Looking Like a Buy-Low OpportunitySubmitted by Jessica Mitacek. Published: 3/29/2026. 
Key Points - Despite early optimism that President Trump’s second term would fuel financials through deregulation and lower rates, the sector is the worst performer so far in 2026.
- Growth has been stifled by legal hurdles, contracting net interest margins, and a significant 68% drop in mortgage originations compared to pandemic highs.
- The XLF is offering a buy-low opportunity amid new executive orders on lending, AI efficiency gains, and technical indicators suggesting that a potential price reversal is in play.
- Special Report: Elon Musk already made me a "wealthy man"
If you spoke with market analysts and investment advisors on the eve of President Donald Trump's second inauguration, you would have been hard-pressed to find anyone who was bearish on financials. Most experts expected banks, insurers, mortgage lenders and other firms in the financial-services sector to enjoy tailwinds during Trump's second term. Wall Street viewed the president as an ally on lower regulatory burdens and looser rules that together would create a supportive environment for companies in the industry. After nearly five decades on Wall Street, Louis Navellier says a major currency shift is already underway - and the wealthiest Americans, including Musk, Zuckerberg, and Ellison, are quietly moving money out of dollars and into a different type of asset entirely. It's not bitcoin or any other crypto. Navellier has identified 7 companies he believes are positioned at the center of this trend - the last time he spotted a setup like this, Nvidia climbed as high as 10,000%. Watch Navellier's urgent briefing and get all 7 company names More than a year into that term, the expected windfall hasn't materialized. So far in 2026, financials are the worst-performing cohort among the S&P 500's 11 sectors, with a year-to-date (YTD) decline exceeding 10%. But, like the well-publicized tech sell-off earlier this year, the pullback in financials could present a buy-the-dip opportunity. That's especially true for the Financial Select Sector SPDR Fund (NYSEARCA: XLF), which has fallen double digits from its January all-time high of $56.51. What's Been Holding Back Financials Expectations for further financial deregulation during Trump's second term initially ran high. After the large rollback of banking rules during his first term, many anticipated additional rollbacks of measures such as parts of the Dodd-Frank Act and efforts to weaken the Consumer Financial Protection Bureau (CFPB). Attempts to shutter the CFPB were unsuccessful, however, as federal judges issued injunctions that constrained unilateral action by the White House. At the same time, financial institutions have faced contracting net interest margins (NIM)—the gap between what banks earn on loans and investments versus what they pay on deposits and debt. With the Federal Reserve maintaining lower policy rates, many banks—especially regional lenders—have seen tighter NIMs, which has reduced overall profitability. The housing market has also weighed on the sector. Consumer mortgage originations at large banks are down nearly 68% from pandemic highs, and 30‑year fixed mortgage rates are at a year-to-date high. Catalysts Are on the Horizon After lagging the market throughout Q1, there are reasons to believe financials could rebound later in 2026. In March, Trump signed an executive order intended to ease lending requirements and promote mortgage lending. Meanwhile, digital-asset integration efforts—including the GENIUS Act—could create new transactional revenue streams. Large banks are also increasingly deploying autonomous AI applications that operate under human oversight, improving efficiency and cutting costs. With the Treasury yield curve normalizing, NIMs should improve for smaller and regional lenders as they can better profit from short-term borrowing adjacent to long-term lending. At the same time, mortgage rates are expected to stabilize and home-price appreciation is likely to moderate, which could help housing affordability. For investors seeking exposure to the sector without betting on one individual bank, insurer or mortgage lender, the XLF provides broad financial-sector exposure at currently discounted prices. A Basket of Big Banks, Brokerages, Insurers, and Payment Processors Among the XLF's holdings are household names. Its top five positions include Berkshire Hathaway (NYSE: BRK.B), JPMorgan Chase (NYSE: JPM), Visa (NYSE: V), Mastercard (NYSE: MA), and Bank of America (NYSE: BAC). The fund's portfolio offers diversified exposure across financial industries, including banks (27.3%), capital markets (25.6%), insurance (24.8%), and diversified financial services (18.4%). The XLF also pays a dividend; its yield of 1.46% more than offsets the ETF's expense ratio of 0.08%. With nearly $49 billion in assets under management, XLF is the world's largest financials ETF. At a current price around $49.34, the fund is trading nearly 13% below its 52‑week high—an entry point that may not last long. Technical Indicators Hint at a Potential Reversal Although XLF trades below both its 50‑ and 200‑day moving averages, several technical signals are encouraging. The Relative Strength Index (RSI) on the ETF's one-year chart fell below 30 in mid‑March—an oversold condition that often precedes a reversal. Since then, the ETF has consolidated and established support around the $49 level. Following that RSI dip, the indicator has climbed above 38 and is trending higher. When the RSI bottomed, it coincided with a bearish death cross (the 50‑day moving average crossing below the 200‑day), but that pattern can be short-lived if momentum continues to improve. For perspective, the last time XLF's RSI fell below 30 was in April of last year during the market's tariff-driven pullback. The ETF then rallied more than 20% through late May. A similar advance from today's levels would push shares toward about $59.20, establishing a new 52‑week high. | 
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