Banks are having their best month in nearly four years. Here are the breakout winners

Published Fri, Oct 23 20202:17 PM EDT

Bank stocks have been on a tear this month, leaving the broader market in the dust. The SPDR S & P Bank ETF ( KBE ) — which is made up of big bank stocks — is up more than 17% in October, putting it on pace for its biggest monthly gain since November 2016. The SPDR S & P Regional Banking ETF ( KRE ) is up 19.4% month to date and is also headed for its best monthly performance in four years. By comparison, the S & P 500 has gained just 2.8% in October. Big banks such as JPMorgan Chase and Morgan Stanley have benefited from the sector's strong performance this month, rising more than 7% each in that time period. However, it has been the smaller banks that have led the gains. New York City-based CIT Group is the best-performing stock in the KBE this month, surging more than 76% in that time period. First Citizens BancShares has jumped more than 53% in October. Triumph Bancorp , Cadence and Texas Capital Bancshares are also among the best-performing bank stocks this month. "I think this is a moment where there are a lot of people who want to rotate into groups that have not moved -- oil, off of the consolidation and the banks because they're just so inexpensive," CNBC's Jim Cramer said Friday on " Squawk on the Street ." The surge in bank stocks comes as U.S. Treasury yields climbed to their highest levels in months. The benchmark 10-year rate is also trading above its 200-day moving average for the first time since December 2018. "Financials are benefiting from the steepening yield curve and the curve is steepening because of the potential for higher inflation down the road due to increased spending, especially if we get a Blue Wave," said Ryan Nauman, market strategist at Zephyr. The prospects of Democrats winning the White House, obtaining a Senate majority and keeping control of the House have risen lately as Joe Biden's lead over President Donald Trump has widened in recent polls. Some investors think a Democratic sweep in the Nov. 3 election would make it easier for the government to pass new fiscal stimulus measures as the U.S. economy continues its recovery from the coronavirus pandemic. "If you get a Blue Wave, you're looking at a greater stimulus package, which could lead to more spending and an uptick in inflation," said Nauman. —CNBC's Kevin Stankiewicz contributed to this report.

Toshi Sasaki | Getty Images

Bank stocks have been on a tear this month, leaving the broader market in the dust.

The SPDR S&P Bank ETF (KBE) — which is made up of big bank stocks — is up more than 17% in October, putting it on pace for its biggest monthly gain since November 2016. The SPDR S&P Regional Banking ETF (KRE) is up 19.4% month to date and is also headed for its best monthly performance in four years. By comparison, the S&P 500 has gained just 2.8% in October.