Since the election, Treasury yields have jumped on expectations of economic growth stemming from Trump's promised tax cuts and infrastructure spending. The incoming administration is also expected to roll back some of the regulations imposed on banks after the financial crisis.
"What we ultimately get is stimulus and regulatory rollback," said Tom Wright, director of equities at JMP Securities. He said those policies should have a much bigger effect than would a 25 basis point rate hike (0.25 percentage point) from the U.S. Federal Reserve.
"Generally, investors have been underweight (banks) for a long time, in the broader brush of things, since the financial crisis in '09," he said. "This is a major shift, and there are larger pools of money that are going into financials."
For example, in the week after the election, RBC Capital Markets began recommending financial stocks as the firm revised its views on seven S&P 500 sectors.
Bespoke Investment Group predicted in a Thursday note that the sector still has room to run higher.
"Financials dropped more than 80 percent during the financial crisis, while the energy sector fell 40 percent from mid-2014 through January of this year," the note said. "So while sectors like consumer discretionary and industrials have also rallied sharply higher since the election, they have exploded higher into new all-time high territory. Financials and energy, on the other hand, both still need to gain roughly 30 percent to get back to their prior all-time highs."
Meanwhile, the rally has spread. Not only have the S&P 500, Dow Jones industrial average and Nasdaq composite hit records, but so have the small-cap Russell 2000 index and the Dow transports. The transports posted their first new high in two years on Wednesday, and all six major indexes hit fresh highs Thursday.
"From a technical standpoint, the situation has improved, even though valuations are stretched," said Ablin, who played down the concerns of investors "equaling this to a tech bubble of the late '90s."
"Now it's just a matter of waiting for the fundamentals to catch up with what the expectations are," he said.