September offered another opportunity in the S&P 500 to make money on AI. But not in the way you might expect.
If you invested $10,000 in January in the top-performing stock in the S&P 500 at the time and reinvested that in each month's top performer, including utility Vistra in September, you'd have $140,004 now, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSurge.
That's an impressive seven-month gain of 1,300%. It's quite a feat given the S&P 500 itself is up just a solid 20.8% so far this year. The same $10,000 invested in the S&P 500, though, would be worth just $12,080 now. That's a gain of just $2,080. The S&P 500 rose 2% in September, lifting it for the seventh month this year.
Will The S&P 500 Get New Leaders In October 2024?
Hindsight is 20-20. And, clearly, few if any investors could have picked the top stock in each of the past nine months, as it's not a repeatable strategy.
But the staggering gains on S&P 500 stocks this year remind investors amazing gains can be scooped up by diligent investors who stay engaged in the market.
In fact, even in a month the index rose, the S&P 500 offered many ways to make even more money. More than 60% of the stocks in the S&P 500 gained during September. And of those, eight stocks jumped more than 20% in just one month.
Top S&P 500 Stock Of September: Vistra
The S&P 500 itself inched higher in September. Many of the huge AI stocks that drove the market all year gained for the month, too. But you could have done even better with a sideline bet.
Vistra, an electric utility based in Texas, saw its shares jump nearly 40% in the month. Investors are bullish on the entire S&P 500 utilities sector, as the power needed to train generative AI models is so enormous. Demand for power will only increase if AI continues to grow.
Analysts think the company's profit will rise 24% this year. Growth isn't something utilities are known for. That's why the stock sports a 10 EPS Rating, out of 99.
Reading The S&P 500 So Far This Year
Monthly S&P 500 winners show how investors ducked and weaved all year.
The AI rally dominated in January. And of course, AI king Nvidia (NVDA) ruled with a 24.2% monthly rise. February the whole S&P 500 jumped 5.2%, its best monthly gain this year so far. And that month the AI-fueling utility Constellation Energy (CEG) won with a 38.6% rise.
And then in March, the semiconductors lit it up. Micron Technology (MU) jumped 30.1%. And then investors pulled back in April due to worries about inflation. The S&P 500 dropped 2.6% in April, while gold miner Newmont (NEM) took off 17.9%.
And then in May, solar-power player First Solar (FSLR) rallied. It's a reflection of investors' appreciation that alternative energy will likely play a larger role in keeping power-hungry AI models running. And then June came the Caesars Entertainment (CZR) rally. In July Mohawk Industries (MHK), a maker of building materials, jumped on hopes of homebuilding strength. And in August, packaged food firm Kellanova (K) jumped 40.1% on a buyout offer from privately held candy maker Mars.
What's Coming Next For The S&P 500?
The big question, though, is: Will the S&P 500's power in September flow into October? Historically, investors famously like to sell in May and go away until November.
And October is often pretty scary for stocks. It's nicknamed "Octoberphobia," as crashes often occur during the month, says the "Stock Trader's Almanac." It's also a pretty meh period in terms of performance. October ranks seventh for S&P 500 returns going back to 1950, says the "Stock Trader's Almanac." The S&P 500 rises just 1% in October on average. And it fell about 40% of the time.
Hopefully this October will shape up better than usual.
How To Turn $10,000 Into $140,004 In 9 Months
| Month | Top S&P 500 stock | Symbol | Monthly gain | Sector | S&P 500 monthly change | Starting balance | Cumulative value of $10,000 investment in January reinvested in best stock each month |
|---|---|---|---|---|---|---|---|
| January | Nvidia | NVDA | 24.2% | Information Technology | 1.6% | $10,000 | $12,420 |
| February | Constellation Energy | CEG | 38.6% | Utilities | 5.2% | $12,420 | $17,214 |
| March | Micron Technology | MU | 30.1% | Information Technology | 3.1% | $17,214 | $22,397 |
| April | Newmont | NEM | 17.9% | Materials | -2.6% | $22,397 | $26,406 |
| May | First Solar | FSLR | 53.1% | Information Technology | 2.3% | $26,406 | $40,427 |
| June | Caesars Entertainment | CZR | 24.8% | Consumer Discretionary | 4.3% | $40,427 | $50,453 |
| July | Mohawk Industries | MHK | 42.7% | Consumer Discretionary | -0.4% | $50,453 | $71,997 |
| August | Kellanova | K | 40.1% | Consumer Staples | 3.9% | $71,997 | $100,868 |
| September | Vistra | VST | 38.8% | Utilities | 2.0% | $100,868 | $140,004 |
