Financials led the U.S. stock market higher on Monday, Feb. 7, and they have been trending upward ever since. Reasons for the resurgence include a string of merger and acquisition (M&A) deals, potential dividend increases, improved earnings and an end to civil unrest in Egypt.

I’ve found an easy way to access the financial sector and some of the big winners in the space without having to buy the individual stocks. The Financial Select Sector SPDR ETF (XLF) holds S&P 500 stocks in the financial sector, so it offers a single fund that you can buy to play financials. As of Feb. 15, XLF holdings accounted for 16.24% of the S&P 500. This fund invests in a wide array of financial services firms with diversified business lines ranging from investment management to commercial and investment banking.

As of Feb. 15, XLF had 81 holdings and its top-five holdings were JPMorgan Chase & Co., 9.33%; Wells Fargo & Co., 9.01%; Bank of America Corp., 7.59%; Berkshire Hathaway B, 7.50%; and Citigroup Inc., 7.27%.

There are several factors that have led to this recent surge in financials. According to The Wall Street Journal, one of the keys is “a ramp up in bank merger activity.” There has been a string of deals among banks that hasn’t been seen in earnest since before the financial crisis. The Journal reports that “In addition to acquisitions, companies flush with cash are instituting a lot of stock buybacks and dividend statements.”

Another plus is that banks may be able to boost their dividend payments. Indeed, an analyst with RBC Capital Markets recently wrote that the following seven banks could raise dividends: Bank of New York Mellon (BK), Capital One Financial (COF), JPMorgan Chase (JPM), PNC Financial Services Group (PNC), State Street (STT), U.S. Bancorp (USB) and Wells Fargo (WFC).

Yet another positive sign is that the Federal Reserve recently reported an increase in credit-card usage during the month of December. It marks the first rise since 2008 and is good news for credit-card issuers. This development should boost their earnings.

Another reason for the surge in bank stocks is an easing of the worry about Egypt. During this past weekend, President Hosni Mubarak resigned to satisfy the demands of protestors, and banks finally opened after more than a week of forced closure due to civil unrest.

As you can see by the chart below, XLF has been on a bumpy ride over the last year. However, you also can observe how far it’s come from the depths of late August. In fact, XLF has risen over 27% from then through Feb. 15.

For advice about which ETFs to buy and to sell, I urge you to sign up for my ETF Trader service. As always, I am pleased to answer any of your questions about ETFs, so don’t hesitate to contact me if you have one. To send a question to me, simply click here. You may just see your question answered in a future ETF Talk.