Ask Matt: How long will financials be dead money?

Q: How long will financials be dead money?

A: Financials are reminding investors why they’ve been a bad place to be this year. But investors are looking for a turnaround soon.

First-quarter earnings reports from big bank so far, ranging from Bank of America (BAC), Wells Fargo (WFC) and JPMorgan Chase (JPM), have all shown year-over-year declines. Financials have turned into the worst of the 10 sectors in the Standard & Poor’s 500 this year. The Financial Select Sector SPDR exchange-traded fund is down 3.7% this year so far, underperforming the market’s roughly 2% increase. Investors correctly anticipated a poor quarter for financials, as analysts expected the sector’s adjusted profit to fall nearly 7% in the period, making it the fourth worst sector behind energy, materials and industrials, says S&P Global Market Intelligence. Analysts are calling for more disappointing earnings from financials in the second quarter, but pick up a bit in the second half of the year. Currently, financials are expected to report 4.5% lower adjusted earnings in the second quarter, S&P Global says. The key is the third quarter, during which analyst see financials’ earnings bouncing back by nearly 9%. And in the fourth quarter, financial profits are to jump 16%, analysts say.

Paste BN markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com or on Twitter @mattkrantz.