It may seem like U.S. equities recovered from the financial crisis years ago, but the market as a whole has not. The global financial crisis naturally hit financial stocks the hardest, and the sector declined nearly 80% following its peak in May 2007. And while the S&P 500 Index reached new highs way back in 2012, financials have lagged. The sector only recently surpassed its previous peak – more than 10 years later. The S&P 500 has doubled in that time, raising valuation concerns about U.S. stocks generally. However, given financials’ slower recovery, they may still have more room to run. Further rate hikes from the Fed could provide another boost to the industry.
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