S&P Capital downgrades financial sector


Headline risk and falling long-term interest rates (flattening the yield curve) are behind S&P Equity Strategy Group's downgrade of the financial sector (XLF -0.6%) to Neutral. The team's estimate of earnings growth is expected to slow to 5.6% next year from 11.4% in 2013.

S&P needs to take a number for its downgrade as the earnings estimate cuts are flying all over the place over the last two weeks. The big banks have made little secret that mortgage and trading slowdowns are going to deliver a big hit to Q3 earnings.

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