Talk about a strong finish. Investors who hung onto the top S&P 500 stocks this year ended up much richer for the effort.
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 Illumina in December, you'd have $313,671 now, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
That's an impressive 12-month gain of 31,268%. It's quite a feat given the S&P 500 itself is up an impressive 24.2% so far this year. The same $10,000 invested in the S&P 500 would be worth just $12,420 now. That's a gain of just $2,420. The S&P 500 put up its second-straight monthly gain in December — snapping months of losses in the summer — as some investors figured bond yields were finally coming down and AI is paying off.
Will The S&P 500 Keep Rolling In January 2024?
Hindsight is 20-20. And, clearly, few if any investors could have picked the top stock in each of the past 12 months, as it's not a repeatable strategy. But the staggering numbers this year remind investors amazing gains can be scooped up by diligent investors who keep buy lists handy for when the S&P 500 starts to rally.
In fact, following two months of big gains, the S&P 500 offered many ways to make money. The S&P 500 itself rose 4.4% in December, which was just its fourth-best monthly gain all year. And more than 83% of the stocks in the S&P 500 rose during December. And of those, 24 stocks jumped more than 20% in just one month.
Top S&P 500 Stock Of December: Illumina
The S&P 500 itself was so strong in December that competition to be No. 1 was tough. But better-than-expected business results from San Diego-based genetic testing company Illumina came up on top with a 36.4% gain — in just one month. Investors were still celebrating the company's third quarter profit that ended up more than 135% better than expected.
Additionally, the company is in play with activist investor Carl Icahn. His Icahn Capital on Oct. 18 announced plans to press for changes at the company. The company's former chairman, John Thompson, was replaced. Investors smell opportunity. The company's profit is expected to fall more than 68% in 2023. But analysts also forecast a nearly 150% profit jump in 2025.
The rest of the top 10 S&P 500 stocks in the final month of the year were a motley crew. A total of three health care stocks finished in the top. And Bath & Body Works was second-best with a more than 32% monthly gain in December.
Reading The Market 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 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 was giving way to fear that more rate increases were coming. Three quarters of the stocks in the S&P 500 dropped in February. Catalent, a health care company, was a rare standout with its 25.6% gain 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, a cruise line operator, saw its shares rally 67.7% in June — topping all other S&P 500 stocks. That was the best monthly gain in the S&P 500 all year.
Finishing Strong
But the trouble started in August, kicking off 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 was apparent with the popularity of insurance stocks like Allstate in October.
But when the Federal Reserve hinted it was through hiking interest rates, the S&P 500 was off to the races. A powerful comeback in travel made online agent site Expedia the top S&P 500 stock in November with a 42.9% gain. The S&P 500 skyrocketed 8.9% in November, making it the best month of the year for the S&P 500.
What's Coming Next For The S&P 500?
The big question, though, is: Will the S&P 500's winning streak continue in January 2024? Historically, the odds look decent.
January is the sixth-best month for the S&P 500 going back to 1950, says the "Stock Trader's Almanac." It's also the month that finishes off the S&P 500's famous "January Effect" which is bullish for small stocks. The S&P 500 rises 1.1% in January on average. And it rose nearly 60% of the time. Keep in mind, too, the November, December and January period is usually the S&P 500 best three-month span, the Almanac says.
And following a stellar November and December, the market is primed for a solid January, too.
How To Turn $10,000 Into $313,671 In 12 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 | |
| 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 | 15.0% | Financials | -2.2% | $139,936 | $160,927 | |
| November | Expedia | 42.9% | Consumer Discretionary | 8.9% | $160,927 | $229,964 | |
| December | Illumina | 36.4% | Health Care | 4.4% | $229,964 | $313,671 |
