If you liked how your S&P 500 stocks did in the first half, you'll love how the second half is starting. And some individual stocks are on fire.
All told, had you invested $10,000 in January and reinvested your money into the top-performing stock currently in the S&P 500 each month in 2023, including Zions Bancorporation in July, you'd have $99,506 now, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
That's an impressive seven-month gain of nearly 900%. It's quite a feat given the S&P 500 is up just 19.5% so far this year. The same $10,000 invested in the S&P 500 would be worth just $11,950 now. That's a gain of just $1,950. July broadened the bull market to include more types of stocks, not just massive tech stocks, especially any associated with AI.
Did July Kick Off A Strong Second-Half For The S&P 500?
Hindsight is 20-20. And clearly, few if any investors could have picked the top stock in each of the past seven months, as it's not a repeatable strategy. But the staggering numbers are a reminder to investors that even more amazing gains can be found in a stellar market.
The S&P 500 itself provided a lift in the month of July. That was an expected push, as the month of July is normally decent one for the S&P 500, says the "Stock Trader's Almanac." The S&P 500 gained 3% in July 2023. That's much better than the 1.3% average gain in the month of July going back to 1950, says the Almanac. July is the fourth best month in terms of returns historically.
Just in July, investors made $1.5 trillion in wealth, says Wilshire Associates. Now investors are up $7.7 trillion this year so far.
Top S&P 500 Stock Of July: Zions Bancorporation
Talk about a surprise rally in July: Bank stocks. Following the collapse of several regional banks earlier in the year, S&P 500 investors sidestepped financials for much of the year. But that stopped in July.
Half of the top-performing S&P 500 stocks this year all hail from the financials sector. That includes Zions Bancorporation, which was the very best stock in the month. Shares of the Salt Lake City-based lender saw its shares jump 42.4% just in the month of July. That helped to ease the pain from losses in every other month this year since February. The stock is still down 22.1% this year.
Reading The S&P 500 This Year
Each month's twists and turns reveal just how the challenging S&P 500 is still worthwhile for investors.
The year kicked off with a bang. Not only did the S&P 500 jump 6.2% in just January, some winners during the month soared even more. Warner Bros. Discovery (WBD) added more than 56% in just a single month.
And then came February with a pullback. Optimism that the Fed finally cooled inflation with its rate hikes is giving way to fear that more rate increases are to come. Three quarters of the stocks in the S&P 500 dropped in February. Catalent (CTLT), a health care company, was a rare standout by gaining 25.6% during the month.
And then in June — a rally firmly took hold. The S&P 500 surged 6.5% in June, marking the index's best monthly gain all year. A huge surge in consumer spending, especially travel, pushed the market in June. Carnival, a cruiseline operator, saw its shares rally 67.7% in June — topping all other S&P 500 stocks.
The big question, though, is whether the rally can keep going in the second half. Bullish trends are firmly intact. But historically, the month of August isn't great. It's just the tenth-best month of the year for the S&P 500, The Almanac says.
But with a July like we just had, S&P 500 may only expect more. "U.S. (stocks) remain resilient: The S&P 500 and Nasdaq are set to post their fifth straight month of gains in July, largely attributed to better-than-expected macroeconomic data," said Megan Horneman, CIO at Verdence Capital Advisors.
How To Turn $10,000 Into $99,506 In 7 Months
| Month | Top S&P 500 stock | Symbol | Stock monthly % gain | Sector | S&P 500 % monthly ch. | Beg. bal. | Cumulative value of $10,000 investment in January reinvested in best stock each month |
|---|---|---|---|---|---|---|---|
| January | Warner Bros. Discovery | 56.3% | Communication Services | 6.2% | $10,000 | $15,630 | |
| February | Catalent | 25.6% | Health Care | -2.3% | $15,630 | $19,631 | |
| March | Intel | 28.7% | Information Technology | 2.0% | $19,631 | $25,265 | |
| April | Chipotle Mexican | 21.0% | Consumer Discretionary | 1.5% | $25,265 | $30,571 | |
| May | Nvidia | 36.3% | Information Technology | 0.2% | $30,571 | $41,669 | |
| June | Carnival | 67.7% | Consumer Discretionary | 6.5% | $41,669 | $69,878 | |
| July | Zions Bancorporation | 42.4% | Financials | 3.1% | $69,878 | $99,506 |
Sources: S&P Global Market Intelligence, IBD
Follow Matt Krantz on Twitter @mattkrantz
