WFC - The Pros and Cons of Smaller Bank Stocks
If you are reading about bank stocks, then you probably know that the sector has been hammered during the coronavirus pandemic. While the S&P 500 is hitting new highs, the KBW Bank Index, which tracks 24 of the largest banks in the U.S., is down more than 33% from the beginning of the year. The KRE index, which measures regional banks, is also down about 33% from the beginning of the year, while the QABA index, which tracks community banks, is down close to 32%.
You've probably read plenty of articles about the big banks, both good and bad. But smaller bank stocks often get left out of the fray. Sure, this sector faces lots of challenges and uncertainty right now, but that's also why some of these stocks could have significant upside. Like many industries, the largest factor weighing on the sector is how soon the coronavirus pandemic subsides and how quickly a vaccine is approved and distributed. But there are still other pros and cons to consider when looking at smaller bank stocks.
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