Investing.com - Bank stocks have emerged as one of the favorite sectors on Wall Street. Higher interest rates may be seen as a threat in some quarters of the market but rising rates are good for the banking industry. As rates go higher, so do bank profits. The banking sector has been one of the best performing since the presidential election of 2016, and some analysts expect the sector to outperform the broader market again in 2018. Banks have more than higher interest rates going for them. Analysts say the strong economy will increase loan demand and attract more deposits. Banks will also benefit from lower taxes, a more favorable regulatory environment and the use of new technology, such as blockchain. Banks even benefit when the financial markets are volatile because trading revenue increases. Bank of America (NYSE:BAC) and JPMorgan Chase (NYSE:JPM) are two of the most common top picks of analysts. Investors can also invest via popular exchange traded funds, such as the Financial Select Sector SPDR Fund and the SPDR S&P Regional Banking (MX:KRE) ETF.
