Gillian Tan is a Bloomberg Gadfly columnist covering deals and private equity. She previously was a reporter for the Wall Street Journal. She is a qualified chartered accountant.

U.S. bank stocks helped drive the Dow Jones Industrial Average to and through the 20,000 milestone, but this may be as far as they take it -- for now, anyway.

Razor Thin
Goldman's shares are trading at just a 6 percent discount to where the average Wall Street analyst thinks they'll be trading this time next year
Source: Bloomberg

Goldman Sachs Group Inc. contributed more than 370 points to the Dow's nearly 1,800-point rally since the presidential election. Its gains are part of a broader resurgence that has lifted financial stocks, which stand to benefit from potential deregulation, economic growth and higher interest rates.

Goldman's contribution alone accounts for roughly one-fifth of the Dow's move since the election that saw it coast past 20,000 on Wednesday
Source: Bloomberg

As we learned last week, Goldman's fourth-quarter results somewhat justified its newfound valuation, if only because it is well-positioned to deliver on future earnings targets by keeping a lid on expenses. And JPMorgan Chase & Co.'s results -- which included a surge in fees from bond trading -- gave its own investors reason to feel comfortable about the stock's recent ascent to a record high: CLSA's Mike Mayo even described the company as the "LeBron James of banking." 

Winners are Grinners
Goldman and JPMorgan outpaced gains by their Dow counterparts since the Nov. 8 election, thanks in part to reset expectations for economic growth and potential changes in regulation
Source: Bloomberg

But with so much optimism already baked in and no additional clarity on policy changes, the bank rally may be due for a breather. Incremental gains -- such as the one witnessed Wednesday when BlackRock Inc. selected JPMorgan to provide custody and fund services of $1 trillion in client assets (to the dismay of State Street Corp.) -- may be as good as it gets.

Election Accelerator
Donald Trump's victory in the presidential election broke bank stocks out of their valuation rut
Source: Bloomberg

These banks (and their rivals) may have room to climb -- especially if, for example, a lower U.S. corporate tax rate becomes concrete and projected Federal Reserve rate hikes take hold. But for the time being, if the Dow is to continue its march into new territory, don't expect banks to chip in much more. They've done their part. 

--With assistance from Brooke Sutherland.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Gillian Tan in New York at

To contact the editor responsible for this story:
Beth Williams at