April may be the cruelest month according to TS Eliot, but investors in US banks are likely to disagree.

The S&P 500 financial sector advanced 8.8 per cent in April and led the gain on the benchmark index, which powered to all time peaks this month.

That marked the biggest one-month gain for financials since November 2016, when it jumped more than 13 per cent after Donald Trump’s election win that spurred hopes for deregulation, tax reform and expectations stimulus plans would stoke inflation and drive up interest rates.

The last time financials were the biggest gainer on the benchmark S&P 500 was June 2017.

Moreover, the broader KBW bank index, one of the most tracked sector benchmarks which follows 24 stocks, was up 8.9 per cent for the month.

The rally in bank stocks comes after a solid first-quarter earnings season — with retail business outperforming while investment banking and capital markets operations stumbled.

Three quarters of financials posted stronger than expected first-quarter earnings and 54 per cent logged better than expected revenues, according to data provider FactSet.

Notably, the advance comes despite the dovish stance adopted by the Federal Reserve at its monetary policy meeting in March, when it ditched plans for rate rises this year.

Higher rates are often a boon to banks’ net interest margins, a crucial measure of profitability, as the difference between what banks charge borrowers and what banks pay for funding widens.

Moreover, the yield curve, measuring the spread between short- and long-term borrowing costs, has flattened this year, which is considered by some to be an indicator of an economic slowdown and when combined with rising credit costs and declining trading revenues, some analysts are unsure of how long the financial rally will last.

With April’s surge, financials are up 17.4 per cent year-to-date, following a 14.7 per cent decline last year.