One sector that was seen as a potential winner of the Trump administration is starting to cool, even as some of the projected benefits seem to be materializing. Wolfe Research analyst Rob Ginsberg wrote in a note to clients that financials are showing signs of weakness. The group is still outperforming the S & P 500 year to date, but the gap has been closing in recent weeks. “The sector peaked on a relative basis in April and has been leaking lower since. The most concerning group in our view? Capital Market names,” Ginsberg wrote, referring especially to financial exchanges and data companies. The analyst highlighted the SPDR S & P Capital Markets ETF (KCE) , which has fallen in five of the past six sessions and has triggered a sell signal in one of the technical analysis tools Wolfe tracks. KCE 1M mountain This ETF focused on capital markets stocks dipped since the middle of May. Curiously, the struggles for financial stocks come just as the initial public offering market is showing signs of life and merger activity has started to regain its footing despite tariff uncertainty. And, in addition to Wall Street power players, the KCE also includes brokerage stocks such as Robinhood and Coinbase that should, in theory, see a boost from the deregulation of crypto. All those areas were seen as reasons to be bullish on the group after November’s election. The recent struggles could be a sign that the upside has been priced in, with some investors now looking to sell in the event of positive news. Wells Fargo is a potential example of this. On Tuesday, the Federal Reserve made the long-awaited move to lift the asset cap on the bank, allowing Wells Fargo to push for growth. However, the stock gave back all of its morning gains to close lower on Wednesday and is well off its highs of the year, reached in February. WFC YTD mountain Wells Fargo is trading below its highs of the year even after the Federal Reserve lifted the bank’s asset cap. “With the steady underperformance of Banks in mind as well, Financials just does not look like one of the more appealing sectors currently,” Ginsberg wrote.