It's been a rough two months for most S&P 500 investors — but not all. There are still plenty of ways to make big money in this market.
Had you invested $10,000 in the top S&P 500 in the past two months — including materials firm Nucor in February — you'd have $17,203 now, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. That's a sweet 70% gain in just two months.
Hindsight is 20/20. And clearly, few if any investors could have pulled this off as it's not a repeatable strategy. But the impressive gains are a reminder to investors making money is possible even in down years if you focus on leaders.
And it sure beats what you'd have just sitting on the S&P 500. The benchmark index dropped 2.9% in February following a 5.3% decline in January. All told, the S&P 500 is down 8% this year so far. Your $10,000 invested in the S&P 500 would be worth just $9,200 now.
"Since the beginning of the year, global equity markets have retreated from record highs as inflation, less accommodative central banks, and geopolitical tensions weighed on investors," said David Sadkin, president and partner at Bel Air Investment Advisors.
S&P 500 Under Pressure All Year
It's been uncomfortable buying and holding the S&P 500 all year — especially this February. But making money wasn't as tough as you might think.
More than 170 stocks in the S&P 500, or roughly a third of the index, are still up this year so far. Additionally, more than 40% of the stocks in the S&P 500 rose just in the month of February.
And that's the point — the average is just that. Buying and holding the index exposed to all the month's roughest stock drops. PayPalPYPL is the worst S&P 500 stock in February: down 39%. But for real wealth building this year, it took straying from the pack. And that meant shifting into areas investors might not have thought of last year.
S&P 500 energy stocks continue to dominate. The Energy Select Sector SPDR Fund is up more than 24% this year. It's just one of two of the 11 S&P 500 sectors to gain on the year. The Financial Select Sector SPDR ETF gained 0.2%.
But some even more stellar runs were possible in the S&P 500.
How $10,000 Turned Into $17,203 In Two 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 top stock each month | Composite Rating |
|---|---|---|---|---|---|---|---|---|
| January | Halliburton | 34.4% | Energy | -5.3% | $10,000 | $13,440 | 98 | |
| February | Nucor | 28.0% | Materials | -2.9% | $13,440 | $17,203 | 97 |
Sources: IBD, S&P Global Market Intelligence
Looking For S&P 500 Leaders In February
February was a curveball for investors in many ways. While the S&P 500 energy sector got the attention, materials was where the action was on an individual stock level.
Three of the top S&P 500 stocks during February, including all of the top three, hailed from the materials sector. That's more than any other sector. None of the month's top stocks were energy firms. That was a bit surprising. The Materials Select Sector SPDR Fund sank slightly, 0.1%, during the month. And at the same time, the Energy Select Sector SPDR jumped 4.4%.
Steel maker Nucor lead the S&P 500 pack in February. Shares of the materials company jumped more than 28% in the month alone. That pulled its year-to-date gain to 13.7%. It's definitely a value-stock play, not a growth one. The company's EPS is seen dropping nearly 20% this year on 1.6% lower revenue of $35.9 billion.
But in a market like this year's, S&P 500 investors are happy to make gains where they can find them.
Top S&P 500 Stocks In February
| Company | Symbol | February % stock gain | Stock YTD % ch. | Sector |
|---|---|---|---|---|
| Nucor | 28.0% | 13.7% | Materials | |
| Freeport-McMoRan | 24.5 | 11.0 | Materials | |
| Mosaic | 23.4 | 25.5 | Materials | |
| Ralph Lauren | 21.0 | 12.8 | Consumer Discretionary | |
| DXC Technology | 18.1 | 10.4 | Information Technology | |
| Organon | 17.7 | 23.3 | Health Care | |
| T-Mobile US | 16.0 | 8.2 | Communication Services | |
| Henry Schein | 16.0 | 12.6 | Health Care | |
| CF Industries | 15.4 | 12.3 | Materials | |
| Live Nation Entertainment | 15.0 | 5.2 | Communication Services |
