The S&P 500 just dropped for the third straight month — clobbering most S&P 500 investors. But there's still plenty of ways to profit amid the quicksand-like market.
If you invested $10,000 in January in the top-performing stock in the S&P 500 and reinvested that in each month's top performer, including Allstate in September, you'd have $160,927 now, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
That's an impressive 10-month gain of 1,509%. It's quite a feat given the S&P 500 is up just 9.2% so far this year. The same $10,000 invested in the S&P 500 would be worth just $10,920 now. That's a gain of just $920. The S&P 500 slipped again in October as some investors figured increasingly rising yields on bonds are good enough.
Will October End The S&P 500's Pain?
Hindsight is 20-20. And, clearly, few if any investors could have picked the top stock in each of the past 10 months, as it's not a repeatable strategy. But the staggering numbers are a reminder to investors that amazing gains can be found even in a market that's taking an extended breather.
Making money in this market is even more impressive as the S&P 500 itself flirts with a 10% correction.
Just seven stocks in the S&P 500 rose 10% or more in the month. And don't assume they're all utilities plays — the only S&P 500 sector to rise (barely) in the month.
Of the seven double-digit gainers, three are in the financial sector. The top gainer was Allstate followed by Progressive, up 15% and 13.5%, respectively.
Insurers are rallying now for several reasons. The stability of their business is attractive as some worry about an economic slowdown induced by higher rates. Meanwhile, insurers can take advantage of higher rates by investing the premiums policy holders paid in fixed income.
Top S&P 500 Stock Of October: Allstate
If you wanted to make money in October, financials were your best bet. The big standout was in the sector: Allstate.
Shares of the insurer surged 15.0% in October, topping all other S&P 500 companies in the tough month. But don't feel bad if you missed this one. It's largely a play on higher interest rates. The stock is still down 5.5% on the year, despite the October rally.
Dollar General's not looking much better fundamentally, either. Analysts think its adjusted loss this fiscal year will widen to $2.73 a share. Investors are clearly looking past all this, out to 2024 when profit is seen jumping to $11.90 a share.
But investors who caught this bounce profited handsomely.
Reading The S&P 500 This Year
Each month's twists and turns reveal that the volatile 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 January alone, 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 coming. Three quarters of the stocks in the S&P 500 dropped in February. Catalent (CTLT), a health care company, was a rare standout with its 25.6% in the month.
And then in June a rally firmly took hold. The S&P 500 surged 6.5%, marking the index's best monthly gain all year. A huge surge in consumer spending, especially in the travel space, pushed the market in June. Carnival (CCL), a cruise line operator, saw its shares rally 67.7% in June — topping all other S&P 500 stocks.
But the trouble started in August, kicking off what's been three straight months of losses for the S&P 500. In August, it was off-the-beaten-path tech play Arista Networks that drove the S&P 500 with a 25.9% rise. It was the counterbalance to the big-cap "Magnificent Seven" stocks that started to crumble.
And then in September, investors scrambled to the relative safety of health care name Centene. And investors' chase for safety is apparent with the popularity of insurance stocks in October.
What's Coming Next For The S&P 500?
The big question, though, is whether the S&P 500's losing streak will finally snap in November. Historically, the odds look good.
November is the top month for the S&P 500 going back to 1950, says the Stock Trader's Almanac. It's also the month that kicks off the S&P 500's best six-month period of the year. The S&P 500 rose 1.7% in November on average. And it rose more than 68% of the time.
Investors tired of the S&P 500's downward trajectory will certainly hope for history to repeat itself.
How To Turn $10,000 Into $160,927 In 10 Months
| Month | Top S&P 500 stock | Symbol | Monthly gain | Sector | S&P 500 monthly change | Beginning balance | 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 | |
| August | Arista Networks | 25.9% | Information Technology | -1.8% | $99,506 | $125,279 | |
| September | Centene | 11.7% | Health Care | -4.9% | $125,279 | $139,936 | |
| October | Allstate | 15% | Financials | -2.2% | $139,936 | $160,927 |
