Banks were the largest U.S. industry during the bull market that began in 2002, when the S&P 500 more than doubled and the economy expanded as much as 3.5 percent annually, according to data compiled by Bloomberg. In the late 1990s, financial firms grew to 18.8 percent of the index, coinciding with the biggest stock rally in history and more than 4 percent average annual growth in gross domestic product.

While both JPMorgan Chase & Co. and Microsoft had about $21 billion in net income in 2012, earnings at the largest U.S. bank by assets were higher than the computer company last quarter as trading and investment banking picked up and demand for personal computers declined. JPMorgan boosted profits 31 percent to $6.5 billion and Microsoft, maker of the Windows operating system, reported a 12 percent decline to $5 billion during the previous quarter.

“We are coming back up with the healing in the banks,” Jeff Saut, the chief investment strategist at Raymond James & Associates, who helps oversee $400 billion, said in a July 24 phone interview from St. Petersburg, Florida. “From an economic standpoint, it means that the banking system is getting healthier and eventually that flows into the economy in making it easier to get a loan.”

Financial Crisis

The last time financial shares were the biggest group in the S&P 500 was May 2008, four months before Lehman Brothers Holdings Inc. filed the biggest bankruptcy in American history. The banking industry lost a record $14.65 a share during the fourth quarter of 2008 and took more than $2 trillion of credit- related losses and writedowns, after risky trading and home lending led to the credit crisis. About $11 trillion was erased from U.S. equity market value in the year and a half that followed, according to Bloomberg data.

Regulators are tightening rules to increase transparency and reduce risk in an effort to prevent another financial meltdown. They are requiring higher minimum capital requirements, a ban on proprietary trading and a mandate to push more swap trades through clearinghouses, which require upfront collateral.

Biggest Banks

JPMorgan, Goldman Sachs Group Inc., Bank of America, Citigroup Inc. and Morgan Stanley control 95 percent of cash and derivatives trading for U.S. bank holding companies as of Dec. 31, according to the Office of the Comptroller of the Currency.

“The regulators are going to look over the shoulders of the banks and make sure that they are not raising their risk profiles,” Stanley Nabi, the vice chairman at Silvercrest Asset Management Group in New York, said by phone July 25. His firm oversees $13.5 billion.

While banks are surpassing analyst estimates by 8.9 percent, economists project slowing growth. GDP will increase 1.8 percent this year, down from 2.2 percent in 2012, according to data compiled by Bloomberg. For 2014, the projection dropped to 2.7 percent from 2.8 percent five months ago. Since 1990, the expansion averaged 2.4 percent annually, data compiled by Bloomberg show.