Why the Spotlight is Shining on Amazon, Teva, Bank of America, and More Today

As mentioned previously, Bank of America Corp (NYSE:BAC), E*TRADE Financial Corp (NASDAQ:ETFC), and Citigroup Inc (NYSE:C) are capturing traders’ interest today after Boston Federal Reserve President Eric Rosengren said that he basically supports raising rates sooner rather than later. The normally-dovish Rosengren’s comments follow Federal Reserve Chairwoman Janet Yellen’s statement made in late-August that the case for raising interest rates at least once in 2016 has “strengthened”. Although the global economy is weak and much uncertainty abounds in China and the emerging world, the U.S. economy is very strong.

With the economy close to full employment, the Fed is paying attention to future inflation risks more than before. If interest rates rise, even gradually, bank stocks such as Bank of America and Citigroup will likely make more in NIM and interest-related profits. Diversified brokers like E*TRADE who loan money on margin will likely do comparatively better. Since the market is forward looking, the stocks of the three, which trade at relatively cheap valuations, could do very well.

Of the 749 hedge funds that we track which filed 13F’s for the June quarter, 35 owned shares of E*TRADE Financial Corp (NASDAQ:ETFC), 97 had a long position in Citigroup Inc (NYSE:C), and 102 were long Bank of America Corp (NYSE:BAC) on June 30.

Disclosure: None