The S&P 500 is off to a strong start this year. And you can thank a small group of favorite stocks for that.
Shares of nine S&P 500 stocks — including Warner Bros. Discovery, United Airlines and Carnival — jumped more than 18% just this year so far, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
That's an impressive start to the year given how ugly 2022 was. The S&P 500 itself is up 3.4% this year so far.
"Wall Street appears to be turning more bullish with stocks," says Edward Moya of Oanda.
2023 Looking Good So Far
It's somewhat surprising to see the S&P 500 spring higher this year, given how bad news keeps piling up.
Analysts are calling for the S&P 500's fourth-quarter profit to fall for the first time in years. Meanwhile, many economists are calling for a recession this year. No matter. More than 80% of the stocks in the S&P 500 are up this year so far.
And compare the robust start to 2023 with the terrible kickoff to 2022. During the first 11 calendar days of 2022, the S&P 500 sank 1.1%. January, too, holds great importance with investors. "As the S&P 500 goes in January, so goes the year," says Stock Trader's Almanac. A good month of January usually portends a good year. This January Barometer has an 83% accuracy rate.
That's why the building strength in January is so positive. But what kinds of S&P 500 stocks are driving it?
A 30% Gain In Two Weeks!
Analysts pounding the table for shares of Warner Bros. Discovery sure got it right so far this year. Shares of the newly formed media giant are up more than 32% since the start of the year.
Wall Street is hoping that putting iconic characters like Batman inside the same company that hosts TV shows like "Animal Planet" will result in a diversified media play. It's going to be an uphill battle, though. The company is expected to lose $1.74 a share in 2022, following a profit of $1.60 a share in 2021. Additionally, analysts think the company will lose 40 cents a share in 2023.
But investors are playing the long game on this one. Analysts think Warner Bros. Discovery will turn a profit of 32 cents a share in 2024, followed by increasing profit in 2025 and 2026.
Airlines And Cruises Bullish, Too
Another big theme in this year's rally is revenge travel. Investors seem to think the long-awaited boom in consumers jumping back on airplanes and cruise ships is finally here.
And they're making no secret of it. Shares of United Airlines, another stock analysts pounded the table for, are up more than 26% this year already. And it's not the only airline to be rallying so much. Shares of American Airlines are up more than 20%.
UAL is expected to finally return to profitability in 2022, making $2.17 a share. That reverses a year-ago loss of $13.94 a share. And in 2023? Profit is seen jumping more than 190%.
It's a similar story with cruise operators.
Shares of Carnival are up more than 22% this year, and Royal Caribbean Cruises is up nearly 20%. Carnival is still seen losing $4.67 a share in 2022, but again, investors are looking forward. The company is only expected to lose 4 cents a share in 2023 and earn 98 cents in 2024. There's also a potential for upside. Carnival's November-quarter loss of 85 cents a share was less than expected.
Yes, it's still very early in the year to read too much into a rally. But seeing such big gains in the S&P 500 in such a short period of time is a welcome change.
Top S&P 500 Stocks So Far
Some stocks are already off to big gains early in the year
| Company | Ticker | YTD stock change | Sector |
|---|---|---|---|
| Warner Bros. Discovery | 32.9% | Communication Services | |
| United Airlines Holdings | 26.6 | Industrials | |
| Carnival | 22.3 | Consumer Discretionary | |
| Western Digital | 21.8 | Information Technology | |
| American Airlines | 20.6 | Industrials | |
| Royal Caribbean Cruises | 19.8 | Consumer Discretionary | |
| Freeport-McMoRan | 19.3 | Materials | |
| Norwegian Cruise | 19.1 | Consumer Discretionary | |
| Paramount Global | 18.5 | Communication Services |
Sources: S&P Global Market Intelligence, IBD
Follow Matt Krantz on Twitter @mattkrantz
