Stocks tanked right on cue in September. But nimble S&P 500 investors are still finding ways to make big money as most others lose.
All told, had you invested $10,000 in January and reinvested your money into the top-performing stock in the S&P 500 each month in 2023, including Centene in September, you'd have $139,936 now, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
That's an impressive nine-month gain of 1,299%. It's quite a feat given the S&P 500 is up just 11.7% so far this year. The same $10,000 invested in the S&P 500 would be worth just $11,170 now. That's a gain of just $1,170. The S&P 500 slipped again in September as some investors figured rising yields on bonds are good enough.
Will September Be S&P 500's Worst Month?
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 numbers are a reminder to investors that amazing gains can be found even in a market that's taking a breather.
Just two stocks in the S&P 500 rose 10% or more in the month. And don't assume they're all energy plays — the only S&P 500 sector to rise in the month. Of the two double-digit gainers, not one is in the energy sector. The top gainers were in health care Centene and materials CF Industries).
Finding winning stocks was admittedly tough. More than 80% of the stocks in the S&P 500 fell in September. The S&P 500 fell 4.9% during the month, the worst monthly loss by far all year. September's drop also extended the 1.8% loss in August.
Seeing the S&P 500 struggle in September isn't much of a surprise, though. The month is historically the worst month of the year, says "The Stock Trader's Almanac." Stocks have lost 0.6% on average in the month going back to 1950, the Almanac says.
But this September was worse than usual, unless you chose well.
Top S&P 500 Stock Of September: Centene
If you wanted to make money in September, energy was your best bet. But there were still standouts in other sectors.
Centene, a Saint Louis, Mo-based managed care company, saw its shares surge 11.7% during September. That was stellar even for a health care company. The Health Care Select Sector SPDR Fund sank 3.4% during the month. But again, that's not as bad as most sectors. Even the tech sector dropped nearly 7% in the month. Only the Energy Select Sector SPDR ETF rose, by 1.7%, in the month.
It's easy to see what investors see in Centene. Analysts think the company's adjusted profit will rise more than 12% in 2023 and another 3% in 2024.
Any growth is welcome. Analysts think company's in the S&P 500 will report 0.1% lower profit in the third quarter.
Reading The S&P 500 This Year
Each month's twists and turns reveal just how 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 to come. 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.
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What's Coming For S&P 500 Next?
The big question, though, was whether the rally could keep going in the second half. The jury is still out on that. Powered by a bounce in financial stocks like Zions Bancorporation (ZION), which rose 42% in July, the first half started strong. But then rising yields gave stocks more competition in August, sending stocks down 1.8%. And now, add in September's loss and investors are starting to see year-to-date gains slip away except with some S&P 500 energy stocks.
All eyes are now fixed on October. And that's hardly a comfort. Historically, October is known as the "jinx month." It's the month of more than its fair share of crashes.
October, though, is only the fifth worst month of the year, says "Stock Trader's Almanac." And it's also the "bear killer" month, sporting average returns of 0.9%, the almanac says. That's promising.
But it's always important to remember, just because many stocks may struggle in October, there's always a way to make money.
How To Turn $10,000 Into $139,936 In 9 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 |
Sources: S&P Global Market Intelligence, IBD
Follow Matt Krantz on Twitter @mattkrantz
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