The Federal Reserve has already hiked interest rates twice in 2022, and the market expects more increases later this year to fight multi-decade high inflation. The rising interest rate environment is generally favorable for many companies in the financial sector, especially banks. That’s because higher interest rates help banks generate more interest income.
Investors’ interest in the financial sector is evident from the ProShares Short Financials ETF’s (SEF) 5.9% returns over the past month. In addition, according to Statista, revenue in banking, finance, and insurance is projected to grow at a 2.4% CAGR from 2022 to 2025.
