XLF - Financial stocks recover from Monday's Archegos trauma

Financials rebound in early trading after dipping in Monday  as investors sifted through the repercussions of Archegos Capital's liquidation and what that means for banks.XLF ([[XLF]] +0.7%), a broad financial sector ETF, almost erases Monday's 0.9% decline; KBE ([[KBE]] +1.3%), an ETF focused on banks, also rises but hasn't yet offset Monday's 2.6% drop.Morgan Stanley ([[MS]] +1.6%) bounces back. Wolfe Research analyst Steven Chubak considers MS's decline of 2.6% on Monday an overreaction."We believe the selloff is overdone relative to potential earnings/capital at risk, and would be buyers on recent weakness," he wrote in a note to clients.Even a worst case scenario of ~$2B in losses would represent less than 50 basis points of capital, "which suggests the $10B buyback authorization for FY2021 would not be at risk," Chubak said.See MS stock performance vs. S&P 500, S&P 500, XLF, KBE, GS and WFC in the past month (excluding today's activity): Goldman Sachs

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Financial stocks recover from Monday's Archegos trauma