Financial stocks are in a sweet spot. Lower short-term interest rates, an expanding economy and some spectacular third-quarter results all helped to buoy shares in businesses that provide financial products or services in late 2024. The outcome of the U.S. presidential election boosted the shares even more; Wall Street has high hopes that the Trump administration will be bank-friendly.
All told, over the past 12 months, financial shares surged 31%. That beat the 25% return in the S&P 500 index, as well as the gains in every other sector except communications services (up 40%) and information technology (up 37%). When the final results of 2024 are in, if analysts are on target, the financial sector will have posted a nearly 15% jump in earnings from 2023, more than the 10% hop in earnings expected for the S&P 500.
