Risk and reward are supposed to be attached at the hip for S&P 500 stocks. But a small group of stocks are delivering all gain and no pain.
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Nine stocks in the S&P 500, including Meta Platforms (META), Palo Alto Networks (PANW) and health care firm Eli Lilly (LLY), held up or even gained ground since July 31 while the S&P 500 started a 5.6% pullback. And even better, despite defying the S&P 500’s drop, all these stocks are up year-to-date by 50% or more.
And some are up quite a bit more than that. On average, these nine S&P 500 stocks gained 73% this year so far. That easily tops the S&P 500’s 13% gain since then. These stocks that rallied all year without interruption highlight how investors think some companies will better handle rising interest rates.
“The breakdown in the S&P 500 from its July 31 highs was exclusively caused by 10-year yields breaking out above 4%, not downward earnings estimate revisions,” said Nicholas Colas of DataTrek Research.
Finding Gains In The S&P 500 As Others Lose
It’s been difficult to sidestep the S&P 500’s struggles since July. But possible.
Ten of the 11 S&P 500 sectors, with the exception of energy, are down since July 31. That’s when rising yields on the 10-year Treasury — pushing 5% — convinced some investors the risk of stocks isn’t worth the pay off. Some of the pullbacks in the S&P 500 were severe. Thirteen stocks in the S&P 500 lost more than a third of their value in that time.
And that’s what made those that skipped the pullback so noteworthy.
Meta-Size Gains With Little Downside
Facebook parent Meta is having a classic no pain, all gain year. Following an abysmal year in 2022, shares of the company refocused on social media and efficiency is up 167.5% this year. But amazingly, investors in Meta avoided all the selling starting in July. Shares of Meta are actually up 1% since July 31.
Similarly, information tech play Palo Alto Networks is up nearly 3% from the S&P 500’s peak this year. And that helped it gain 84% this year so far. It’s interesting to point out both Meta and Palo Alto Networks pay no dividend. Dividend paying S&P 500 stocks have suffered this year as many investors instead opt to buy “risk free” Treasuries instead.
Some stocks actually thrived during the sell-off starting in late July. Shares of neurological and weight-loss treatment leader Eli Lilly are up 27.4% since the S&P 500 peaked. And that only added to the stock’s gains this year. Shares of Eli Lilly are up nearly 60% this year so far.
Risk and reward eventually catch up with each other. But this year at least you could get paid solid returns without getting put through the wringer.
All Gain, No Pain?
S&P 500 stocks up 50% or more this year while not falling from the index’ high
| Company | Ticker | YTD % ch. | Ch. during S&P 500 pullback | Sector |
|---|---|---|---|---|
| Meta Platforms | (META) | 167.5% | 1.0% | Communication Services |
| Palo Alto Networks | (PANW) | 84.0 | 2.7 | Information Technology |
| West Pharmaceutical | (WST) | 64.6 | 5.2 | Health Care |
| Arista Networks | (ANET) | 60.5 | 25.6 | Information Technology |
| Eli Lilly | (LLY) | 58.4 | 27.4 | Health Care |
| Alphabet | (GOOGL) | 56.5 | 4.0 | Communication Services |
| Cadence Design Systems | (CDNS) | 55.5 | 6.7 | Information Technology |
| Synopsys | (SNPS) | 53.5 | 8.5 | Information Technology |
| Booking Holdings | (BKNG) | 51.9 | 3.0 | Consumer Discretionary |
| SPDR S&P 500 ETF Trust | (SPY) | 13.0 | -5.6 | Financials |
Sources: S&P Global Market Intelligence, IBD
Follow Matt Krantz on X (Twitter) @mattkrantz
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