U.S. bank stocks are quietly building momentum and hedge funds are loading up. According to Goldman Sachs' prime brokerage unit, net buying by fast-money funds just hit a near 10-year high. What's fueling the charge? A trifecta of tailwinds: rising hopes for Fed rate cuts, a clean sweep in the latest bank stress tests, and expectations for lighter-touch regulation. Together, they've pushed the S&P 500's (SPY) financials gauge to a record high. Piper Sandler also flagged a surge in bullish positioning, with call option activity on the Financial Select Sector SPDR Fund (XLF) approaching a four-month peak.

Annual test finds big banks resilient in hypothetical recession