The strong second quarter results from big banks like JPMorgan, Citigroup and Bank of America bodes well for both the financial sector and the entire S&P 500 in the second half, said Dan Veru, Chief Investment Officer at Palisade Capital. 'We are seeing some underlying strength in the financials,' said Veru. 'Those have been largely absent from the market rally for the last several years. They have certainly underperformed and I sense that could be changing right now.' Headquartered in Fort Lee, New Jersey, Palisade has approximately $4.4 billion of assets under management as of March 31, 2015. Veru added that rising interest rates will enhance bank profits going forward. He said the Federal Reserve has all but telegraphed its direction on rates, although he believes the rate hike will be a 'one and done' event. 'While the economy has been improving, it’s been improving at a very slow rate. That’s going to be good for bank profits as the yield curve gradually steepens and there is more opportunity,' said Veru, adding that the big fines paid by the banks as a result of their mortgage crisis misdeeds have likely crested which will lift bottom lines as well.
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