Yahoo TV

The financial sector ETF (XLF) has fallen nearly 5 percent over the last three months as the Federal Reserve interest rate tightening has taken its toll on the sector. Many investors are wondering what this means as we head into 2024 and what it will take to get this sector back on its feet. RBC Capital Markets Managing Director Gerard Cassidy joins Yahoo Finance to discuss how high interest rates have affected the financial sector and what investors should look out for if the central bank achieves its goal.

Cassidy gives historical context, referring to 1994 when the Fed started raising rates, Orange County filed for bankruptcy, and the bond market tanked. He claims if the central bank can "thread the needle" with "what they called back then the goldilocks economy or the soft landing, banks were up 55% in '95. Best single sector in the market," then we should be able to see similar results for next year.

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