Q1 earnings reports have come in from four prominent names in the financial sector — Goldman Sachs, JP Morgan Chase, Wells Fargo, and Citigroup. For active traders, earnings data can create opportunities in the Direxion Daily Financial Bull 3X ETF (FAS ) and the Direxion Daily Financial Bear 3X ETF (FAZ ), which offer triple-leveraged exposure to financial industry titans.
Key Takeaways:
- Strong Q1 performance from banking leaders like Goldman Sachs and Citigroup suggests a shift from sector survival to expansion, driven by resilient net interest income and a resurgence in investment banking activity.
- Because major banks like JPMorgan and Wells Fargo serve as anchor holdings in the Financial Select Sector Index, their combined earnings results act as a primary catalyst for the price action in triple-leveraged ETFs like FAS and FAZ.
- These leveraged funds provide active traders with high-powered tactical tools to either capture bullish momentum from positive earnings drift or hedge against potential sell-the-news volatility as the market delves deeper into Q2
Fundamental Tailwinds
Comprehensively, earnings reveal a financials sector that is thriving despite a complex macro environment. JPMorgan Chase and Wells Fargo noted that higher-for-longer interest rates are bolstering net interest income (NII) though the latter missed on revenue expectations. In the meantime, Goldman Sachs and Citigroup capitalized on increased market activity due to a resurgence in mergers and acquisitions (M&A) to start 2026.
Goldman Sachs, in particular, saw strong revenue generation from investment banking and equities trading. Likewise, Citigroup echoed this strength with a 42% jump in profit as trading revenue surged amid heavy Q1 volatility.
All four of these banks maintain a strong presence in the Financial Select Sector Index. In turn, their combined earnings act as a direct lever for FAS and FAZ. These ETFs are designed to magnify the daily price action of the sector, making them ideal for trading the post-earnings “drift.”
- FAS (3X Bull): A post-earnings drift could see the sector continue to push higher into Q2. If traders view earnings from JPMorgan and Goldman as signs that the broader economy is resilient, FAS can capture positive momentum in the financial sector.
- FAZ (3X Bear): Conversely, if a sell-the-news spree occurs or further digestion of earnings results produces a bearish tilt, then FAZ offers a powerful way to play the downside or hedge against a bullish position.
See More: Is Goldman Sachs Reheating Financial ETFs After Earnings Beat?
Survival to Expansion
With uncertainty pouring into the capital markets in the first quarter of 2026, financials weren’t immune to the volatility. In the early going of Q2, the financial sector subject to market movements due to interest rate sensitivity and geopolitical headlines.
Nonetheless, the overall Q1 earnings suggest that the sector could survive the challenges and potentially enter a phase of expansion. Dovish tones from the U.S. Federal Reserve could also help spur the sector higher. For traders who can synthesize the earnings data, FAS and FAZ provide tactical tools to navigate the sector in Q2.
While seasoned traders should only used leveraged products, Direxion does have a dedicated "education center":https://www.direxion.com/leveraged-etf-education for those interested in learning more about these funds.
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