After underperforming for most of the year financials are having a moment in October.

Better than expected earnings from major US banks has helped the S&P 500 financials sector clock a 1.3 per cent gain so far this month. What’s more, it is the only major sector on the benchmark index to be in the black this month.

Shares of banks listed on the S&P 500 have advanced 2.8 per cent so far this month as the six biggest US bank — including Wells Fargo, which is working to rebuild consumer confidence after engaging in fraudulent sales practices — have all reported better-than-expected profits and revenues in the third quarter.

It was the performance of the bond trading units, which have benefited from improving market conditions this year, that surprised investors. However, analysts have been quick to note that banks have benefitted not just from easy comparisons from a year ago but from subdued forecasts leading up to the reporting period.

Financials were also lifted as its two other sub-sectors eked out gains this month. The insurance industry sub-sector is up 1.1 per cent so far this month, while the diversified financials sub-sector has climbed 0.4 per cent so far this month.

Despite October’s gains, financials continue to lag behind the S&P 500 so far this year — up just 1.1 per cent compared with a 4.7 per cent gain for the broader benchmark index.

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