While artificial intelligence (AI) has dominated headlines for much of the year, and sent many tech stocks soaring, some of the strongest performance across equities has come from far less glamorous corners. Bank stocks are in the middle of a standout run, with the Financial Select Sector SPDR ETF (NYSEARCA: XLF) having just hit an all-time high. That strength has come despite the Federal Reserve entering a softer phase, with rates no longer rising and expectations building that the tightening cycle is largely done, for now at least.
That combination forces an uncomfortable but necessary question. If banks have already rallied hard into a rising rate environment, can the good times realistically continue into 2026? To answer that, let’s take a closer look at three of this year’s better-performing bank stocks and see how each is setting up in January.
