The U.S. financial sector roared to life Wednesday afternoon, with the Financial Select Sector SPDR Fund (NASDAQ:XLF) posting one of its strongest single-day gains in years, soaring 6.8% to $46.89.

What To Know: A surprise move by President Donald Trump announcing a 90-day suspension of tariffs on countries that have not retaliated against U.S. trade actions — a policy pivot that electrified markets.

The XLF, a bellwether ETF tracking major financial stocks in the S&P 500, was swept up in the broader rally, benefiting from surging optimism about global trade, interest rate expectations, and economic acceleration.

Top holdings like JPMorgan Chase & Co (NYSE:JPM), Bank of America Corp (NYSE:BAC), Wells Fargo & Co (NYSE:WFC), Citigroup, Goldman Sachs Group Inc (NYSE:GS) and BlackRock Inc (NYSE:BLK) surged alongside the fund as capital rotated aggressively into economically sensitive sectors.

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Why Financials Took Off Wednesday

1. Pro-Growth Signal Spurs Yield Rebound

Trump's tariff policy, while aggressive toward China, was unexpectedly conciliatory toward much of the world. By offering a temporary pause and a low flat-rate tariff to over 75 cooperative countries, the administration signaled a more stable international trade environment.

Markets appeared to interpret the shift as a pro-growth development, pushing bond yields higher — a direct benefit to banks that profit from wider interest rate spreads.

The benchmark 10-year U.S. Treasury yield jumped nearly 20 basis points Wednesday afternoon, steepening the yield curve. For banks, this steepening improves profitability on loans and investments.

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2. Financials as a High-Beta Trade

As risk appetite returned, financials were among the most aggressively bought. The sector is considered high-beta — it tends to outperform when markets are bullish and underperform during risk-off conditions.

With volatility collapsing (the VIX fell around 30%) and equities ripping to fresh highs, institutional money flowed back into financials after months of underperformance.

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3. Relief from Global Uncertainty

Though Trump's rhetoric toward China was anything but soft, his praise for non-retaliating countries and the 90-day trade reprieve reduced uncertainty for multinational institutions.

Global banks and asset managers — like Morgan Stanley, Goldman Sachs and BlackRock — likely gained on expectations of increased cross-border capital flows and fewer disruptions in foreign markets.

According to data from Benzinga Pro, XLF has a 52-week high of $52.63 and a 52-week low of $39.54.