Financial stocks are falling below a key chart level to warn the worst is yet to come

Financial stocks may face further pressure, according to an analysis focused on the State Street Financial Select Sector SPDR ETF (XLF) and interest-rate dynamics. The piece says the yield curve is steepening as rates rise—often a historically negative setup for banks—and notes that XLF has dropped nearly 9% since peaking on Sept. 3, now trading near a “critical” technical support level that appears to be breaking. The author estimates that could mean an additional 5% decline. The article contrasts earlier periods in 2023 and early 2025 when XLF also struggled during steepening episodes, and points to a current setup with potential weakness if XLF falls below support at $53.50, with a possible move toward $50.75. It also cites an oversold condition with a relative strength index near 22.