Freedom Capital Markets Chief Market Strategist Jay Woods has identified the financial sector as a concern for the current market environment. In a recent weekly newsletter, Woods pointed to the SPDR Financial Select Sector ETF (NYSE: XLF) as a chart that "scares" him.
The market expert noted that the XLF has recently broken its uptrend and failed to hold a key support area. Woods warned that the ETF is in danger of moving lower ahead of the upcoming earnings season. He emphasized that while financials do not always need to lead the market—citing technology-led advances in 2020 and 2023—seeing the sector lag is described as a "yellow flag." Woods stated that the price action is currently trying to recapture the 200-day moving average and is currently oversold.
Woods explained the importance of the financial sector, noting that it accounts for roughly 12% of the S&P 500. He described financials as the market's heartbeat, suggesting that their strength alongside other stocks can provide confidence that the economy is supporting a rally.
Looking ahead, the financial sector is set to kick off the next earnings season next week. The following major financial companies are scheduled to report quarterly results on October 13: JPMorgan Chase (NYSE: JPM), Citigroup (NYSE: C), Wells Fargo (NYSE: WFC), and Goldman Sachs (NYSE: GS). Bank of America Corporation (NYSE: BAC) is scheduled to report on October 14.
According to the text, the XLF ETF is up 7.2% over the last six months, but is down 2.6% year-to-date in 2026 and down 0.4% over the last 52 weeks.
