Fintech stocks have experienced difficulties since 2021, but changes may be on the horizon. Wolfe Research technical strategist Rob Ginsberg noted that the Global X FinTech ETF (FINX) is nearing the $30 mark for the first time since 2022. Additionally, the fund is trading above its 50- and 200-day moving averages. Although the financial sector has recently performed well overall, fintech stocks have lagged behind and are just beginning to exhibit an upward trend from a long-term perspective. Ginsberg stated that the FINX ETF encapsulates this situation accurately, mentioning that the ETF is attempting to break out of its current level, suggesting a potential rise above $30.
The fund has faced challenges since November 2021, losing over 46% of its value as the Federal Reserve increased interest rates to mitigate inflation. However, this year the ETF has shown improvement, achieving a gain of over 9% as the Fed starts to ease its monetary policies. Over the past 12 months, the ETF has seen an increase of nearly 40%.
A breakout in fintech could have wider implications beyond the sector itself. Firstly, it might confirm the stock market’s rally following the Fed’s rate cut, with the S&P 500 and the Dow Jones Industrial Average hitting record highs and achieving year-to-date increases of 20% and 12%, respectively. It may also indicate that the easing monetary policy is successfully bolstering the economy, although the overnight rate remains between 4.75% and 5%, significantly higher than the near-zero rates of late 2021.
For investors seeking fintech exposure, CNBC Pro scanned the FINX fund to identify stocks that meet specific criteria: a buy rating from at least 60% of analysts, a projected upside to the average price target of 10% or more, listing on the New York Stock Exchange or Nasdaq, and coverage by at least eight analysts. The stocks that met these criteria include Flywire, Riot Platforms, and Block.
In other news on Wall Street, Barclays has upgraded Hewlett Packard Enterprise (HPE) to overweight from equal weight. Analyst Tim Long commented that HPE is expected to continue growing its AI server revenues and improving its storage capabilities. Additionally, Long expressed optimism about the accretion from HPE’s acquisition of Juniper Networks, a deal valued at approximately $14 billion and anticipated to close by the end of the year.
