The S&P 500 is rising again, giving investors a break from a painful few months. And investors are tipping their hands to the stocks they're betting on.
Six of the 10 S&P 500 stocks to jump the most in the rally over the past three trading days, including Dollar Tree, Norwegian Cruise Line and Tesla, all hail from the consumer discretionary sector, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. It was the S&P 500's best week of the year.
The rally is an indication that while S&P 500 investors are piling back into growth stocks, they're not going for the obvious bounce-backs. The S&P 500 is up 5.4% in just three days, and the SPDR Portfolio S&P 500 Growth ETF is up 7.2%.
"It's been a rough ride and despite this week's performance, there could still be more pain to come," said Craig Erlam, strategist at Oanda. "But at these levels, it's only natural that the vultures are circling."
Investors Eager To Jump Back Into S&P 500
Investors piling back into the S&P 500? Now that didn't take long. The first 100 days this year are the worst for the S&P 500 since the 1970s.
The surge is notable. Investors poured more than $20.5 billion into stocks during the week of May 27, says Bank of America. That's the largest inflow in 10 weeks. Inflows, though, are still a fraction of the highs in early 2021. Meanwhile, investors yanked money out of "safe" investments like bonds and bank loans.
Investors "may not be buying the dip, but they are at least holding it," said Nicholas Colas, co-founder of DataTrek Research. So, what are they buying?
Top Gainers In Sudden Rally: Dollar Tree
Not all S&P 500 gainers are all positive commentaries on the economy. Take the top stock in the three-day S&P 500 rally: Dollar Tree.
Shares of the discount retailer soared 25% in just three days. That's an especially noteworthy run as some large retailers' shares are rallying back. The SPDR S&P Retail ETF jumped 13.8% during the past three days.
But Dollar Tree's position as a low-price option for consumers fighting inflation is compelling. The company's adjusted profit per share is seen rising nearly 39% this fiscal year. That's much higher than the S&P 500's expected profit growth. Dollar Tree is now up nearly 16% this year, even as the S&P 500 remains off nearly 13%.
Norwegian Cruise is a very different bet. Investors buying in think consumers will dig deep to travel again. Shares shot up nearly 22% in just three days leaving them still down nearly 22% on the year. Why? The cruise ship operator is still reeling from the Covid shutdowns. The company is expected to lose another $2.32 in 2022. That's better than the $8.07 it lost in 2021. And it's supposed to return to profitability in 2023.
Bounce-Back Counts Tesla In Its Ranks
And what would an S&P 500 bounce back be without including electric-vehicle maker Tesla?
Shares of Elon Musk's company surged more than 20% in the past three trading days. And that's despite getting removed from some ESG indexes. The stock, though, is still suffering this year, having fallen more than 28%. Analysts, though, think the company will have a banner year. They're calling for Tesla's profit to surge more than 80% this year.
Is it too soon to jump on? General market indicators will tell you the answer to that. But for now, it's interesting to see investors coming back in and what they're buying.
Top S&P 500 Stocks In Rally
They're all up more than 17% in just three trading days
| Company | Ticker | 3-day rally | YTD ch. | Sector |
|---|---|---|---|---|
| Dollar Tree | 25.0% | 15.9% | Consumer Discretionary | |
| Norwegian Cruise Line | 21.9 | -21.9 | Consumer Discretionary | |
| Tesla | 20.6 | -28.3 | Consumer Discretionary | |
| Caesars Entertainment | 19.4 | -44.9 | Consumer Discretionary | |
| DXC Technology | 19.2 | 9.0 | Information Technology | |
| Generac Holdings | 18.8 | -27.2 | Industrials | |
| Carnival | 18.8 | -30.6 | Consumer Discretionary | |
| Autodesk | 17.7 | -24.8 | Information Technology | |
| Intuit | 17.7 | -34.3 | Information Technology | |
| Bath & Body Works | 17.4 | -39.2 | Consumer Discretionary |
