Financials Up as Market Strength Seen Helping Money Managers -- Financials Roundup

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Banks, lenders and other financial companies rose as traders bet a stock-market rally and prospects of lower taxes would lead to more cash flowing into money managers' coffers. The SPDR Select Financial Sector exchange-traded fund, which tracks the performance of the Standard & Poor's 500 financial sector traded at its highest level since 2007, when the last bull market in stocks ended. Some analysts say there could be another "melt-up" before year-end. "As 2017 winds down, we still have one of the most well-known trading axioms left -- 'the Santa Claus Rally,'" said Ryan Detrick, senior investment strategist at brokerage LPL Financial, in a note to clients. As defined by Yale Hirsch's "Trader's Almanac," the Santa Claus rally is the seven-session period ending on the second session of the New Year, Mr. Detrick said "So, should you believe in Santa? Going back to 1950 on the S&P 500 Index, the Santa Claus Rally is the second strongest seven-day period of the year." In the years following a positive performance during this seven-day period, the stock-market return in January is usually stronger, Mr. Detrick added. Mortgage-finance giants Fannie Mae and Freddie Mac will retain some of their quarterly earnings as part of an agreement between the Trump administration and their regulator. This will allow the companies build a small buffer against future operating losses, a buffer that had been in jeopardy under administration plans to reform the financing arrangements.

-Rob Curran, rob.curran@dowjones.com

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(END) Dow Jones Newswires

December 21, 2017 16:36 ET (21:36 GMT)