Expectations of Rising Rates and Worries About AI Have Investors Piling Into Big Bank Stocks

Bank stocks are drawing fresh investor money as expectations of higher interest rates and stronger deal activity support earnings. The Invesco KBW Bank ETF (KBWB) rose about 1% Wednesday and has hit record highs in August, up roughly 14% year-to-date—slightly ahead of the S&P 500’s 12% gain. The trend is visible globally: Canada’s S&P/TSX Composite bank index has added about a quarter of its 2026 value, while the broader Canadian market is up around 14%. Similar momentum appears in Japan and Europe, helped by rate expectations and worries about AI’s impact.