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Market Notes: Investors Still Putting Money Into Banks -- July 1

|Includes:AGII, AWH, IAT, IBOC, KBE, SPDR S&P Regional Banking ETF (KRE), UBSI

Nearly all of the sector etfs are trading in the green today with the glaring exception of mortgage REITs (NYSEARCA:MORT) and utilities (NYSEARCA:XLU), showing that investors are preferring risk (stocks) over over-valued income (bonds). The move back into equities prompted breakouts in many sectors including health related etfs--Pharma (NYSEARCA:PJP), Healthcare (NYSEARCA:XLV), and Biotech (BBH, FBT, IBB); tech related funds--Tech (NYSEARCA:XLK), Internet (PNQI, FDN), IT (NYSEARCA:VGT); and semiconductors (SMH, SOXX). Many individual issues in these names are becoming stretched on a valuation basis but there's still some bargains to be had in the more staid areas of the economy.

Two of these areas are banks and insurance companies, both of which saw solid gains today. (Check out today's 1-2% rallies in the bank etfs (KRE, KBE, IAT) and the insurance etf (NYSEARCA:KIE).) Most of the stocks in these groups that broke out to new yearly highs had price-to-earnings (P/E) ratios lower than the S&P's (currently at 19.7). Here's the list of the most compelling stocks from these two financial groups along with their P/E ratios and current dividend yields:

Banks: Int'l Bancshares (IBOC, $27.6; P/E = 13.1; D/Y = 1.8%) and United Bankshares WVa(UBSI, $32.8); P/E = 18.8; D/Y = 3.9%)
Insurers: Argo Group Int'l (AGII, $52; P/E = 9.2; D/Y = 1.4%) and Allied World Assurance (AWH, $38.5; P/E = 8.9; D/Y = 2.3%)