After the collapse of Silicon Valley Bank, many investors fled bank stocks.
So far, experts say the company’s mistakes will not affect the rest of the US financial system.
Goldman Sachs recommends investors the highest-growth stocks in the restructured financial sector.
US financial stocks suffered a major setback this week after the Silicon Valley Bank collapsed.
Shares in other banks fell as investors feared that the factors that brought down SVB could set off a chain reaction that would take a toll on the entire financial system.
Immediately after the collapse, however, experts said they saw no signs of a threat from other financial institutions.
“We are not seeing any classic signs of spread at this time, such as pressures in the interbank market,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. Mark Hackett, Nationwide’s head of investment research, echoed the sentiment.
Changes in the stock market create new growth stocks
Given the speed with which the SVB collapsed, it is perhaps not surprising that investors were not immediately reassured. But unless the SVB’s collapse escalates into a systemic crisis, investor confidence should eventually recover. And when it does, there’s one more notable change to consider.
On March 17th, the S&P Dow Jones will restructure the composition of a handful of market sectors. The biggest changes are in technology and financials – companies like Visa, Mastercard and PayPal are moving out of the technology sector and into the financial sector.
Retailers Target, Dollar General and Dollar Tree will also move out of the consumer discretionary category into the consumer staples category, where they will join Walmart and Costco.
These changes will affect ETFs and funds tracking these sectors as they will need to adjust their holdings. David Kostin, chief strategist for US equities at Goldman Sachs, believes the changes would bring more growth to the financial group, which has traditionally been viewed as a value stock space.
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Kostin and his team believe the stocks below will be the top growth drivers of the sector based on expected compound earnings per share growth rates over the years 2021-2024. They are ranked in order of lowest to highest, based on an average of analysts’ estimates of earnings growth over the period.