June isn’t supposed to be a good month for the S&P 500. But it was — especially for investors who chose wisely.
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All told, had you invested $10,000 in January and reinvested your money into the top-performing stock currently in the S&P 500 each month in 2023, including Carnival (CCL) in June, you’d have $69,878 now, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
That’s an impressive six-month gain of nearly 600%. It’s quite a feat given the S&P 500 is up just 15.9% so far this year. The same $10,000 invested in the S&P 500 would be worth just $11,590 now. That’s a gain of just $1,590. June also extended a big bounce in massive tech stocks, especially any associated with AI.
Investors hope June is just the start to the rest of a stellar year.
“In years when the S&P 500 was up sharply (10%+) in the first half, median performance during the month of July, all of (the third quarter), and the entire second half have all been better than the historical norm,” said Bespoke Investment Group.
Did June Kick Off A Strong Second-Half For The S&P 500?
Hindsight is 20-20. And clearly, few if any investors could have picked the top stock in each of the past six months, as it’s not a repeatable strategy. But the staggering numbers are a reminder to investors that gains can be found in a choppy market.
The S&P 500 itself provided a tailwind in the month of June. That was a welcome change, as the month of June isn’t normally a great one for the S&P 500, says the “Stock Trader’s Almanac.” The S&P 500 gained 5.2% in June. That’s much better than the 0.1% average gain in the month of June going back to 1950, says the Almanac. May is only the ninth best month in terms of returns historically.
Top S&P 500 Stock Of June: Carnival
Revenge travel is real. And it’s paying off nicely for S&P 500 investors. Cruise operator Carnival was the S&P 500’s top stock during June — jumping 67.7%.
Investors are clearly jumping in ahead of an about-face for the company’s fundamentals. Carnival is expected to post a profit of 77 cents a share in the August-ended quarter on Sept. 29. That would reverse a year-ago loss of 58 cents a share. And that puts the company on course to turn profitable again in 2024.
And as part of the travel theme, the No. 2 top S&P 500 stock in June is Norwegian Cruise Line (NCLH). And in fact, four of the top 10 S&P 500 stocks in the month were travel related. Norwegian gained 46.6%, while Delta Air Lines (DAL) rose 44.7% and Royal Caribbean Cruises (RCL) added 28.1%.
Reading The S&P 500 This Year
Each month’s twists and turns reveal just how the challenging 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 just January, 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 by gaining 25.6% during the month.
The big question, though, is whether the rally can keep going following a strong June and first half. Odds say yes. Historically, the month of July is the fourth-best month of the year for the S&P 500, The Almanac says.
Bespoke points out that July recently has been even better. “Over the last 10 years, performance has been even stronger with the S&P 500 averaging a gain of 3.27% and positive returns 90% of the time, including each of the last eight years.”
And that just sets the table for what’s normally a strong second half following a good first half.
“Finally, the median second-half performance of the S&P 500 following a 10%+ gain in the first half is more than twice the median second-half performance for all years since 1945 (10.13% vs 4.96%),” Bespoke said. “Based on market history over the last 75 years, years that have started strong tend to finish strong as well.”
How To Turn $10,000 Into $69,878 In 6 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 | (WBD) | 56.3% | Communication Services | 6.2% | $10,000 | $15,630 |
February | Catalent | (CTLT) | 25.6 | Health Care | -2.3% | $15,630 | $19,631 |
March | Intel | (INTC) | 28.7 | Information Technology | 2.0% | $19,631 | $25,265 |
April | Chipotle Mexican | (CMG) | 21.0 | Consumer Discretionary | 1.5% | $25,265 | $30,571 |
May | Nvidia | (NVDA) | 36.3 | Information Technology | 0.2% | $30,571 | $41,669 |
June | Carnival | (CCL) | 67.7 | Consumer Discretionary | 6.5% | $41,669 | $69,878 |
Sources: S&P Global Market Intelligence, IBD