All three have had good rallies this year. Brokerages fared well as money has sloshed into the stock market. Life insurance companies prospered from the sales of variable annuities. Banks have been the latest financial services sector to rally. First, interest rates are stabilizing.
Banks borrow money from depositors and then lend it out.
That's enough spread for most banks to earn a reasonable profit. Bank stocks were clobbered last year, because Wall Street generally figures that when interest rates rise, banks must pay more for deposits. This, in turn, hurts earnings. Banks have become adept at boosting loan rates and raising fees when rates rise. For now, another rate increase seems unlikely, which explains why bank stocks have rallied.