Financial ETF Higher After Morgan Stanley Upgrades The Sector

The Financial Select Sector SPDR (AMEX: XLF) is 2.4% higher today, reacting positively to a sector upgrade at Morgan Stanley.

Morgan Stanley raised its rating on the beleaguered sector from Underweight to Neutral. The firm said the valuation of bank stocks now reflect both a weak cyclical outlook for earnings and a sustainable return-on-equity much lower than in the past.

The firm recommend buying JP Morgan (NYSE: JPM) and American International Group, Inc. (NYSE: AIG) in the sector.

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