5 Stocks That Helped The S&P 500 Index Score Big In 2019

After almost two years, both the United States and China are finally set to sign a trade deal. However, this war has already weighed heavily on stocks. Then again, the Federal Reserve’s consecutive rate cuts have given the economy a boost and helped the S&P 500 hit fresh record highs for consecutive sessions.

S&P 500 Crosses 3,000 Points

The S&P 500 has crossed the coveted 3,000 point mark this year and the broader index has gained 18.2%. The index had hit 2,000 on Aug 26, 2014.

With the easing of U.S.-China trade war and Brexit worries, and the Federal Reserve’s three consecutive rate cuts, stocks kept posting solid gains. This in turn, provided a thrust to the S&P 500, pushing it to fresh record highs. In fact, the S&P 500 gained 0.7% on Dec 16, to close at 3,191.45, a new record high, as both the United States and China showed keenness to sign the “phase one” trade deal in January 2020.

Factors that Helped S&P 500 Score Big

The United States and China imposed a series of higher tariffs on each other since 2018. Also, the blacklisting of Huawei Technology on grounds of security threats made matters worse. However, in the beginning of October, China agreed to buy more agricultural products from America and the United States in return halted the tariff hike scheduled on Oct 15.

As trade talks progressed between the two economic giants despite several ups and downs, a phase one deal got confirmed in December that is due to be signed in January 2020. Investors heaved a sigh of relief as the trade war finally showed signs of easing and stocks made solid gains.

The Federal Reserve has been constantly supporting the economy. Three consecutive rate cuts since July erased nearly half of all the rate increases in the past two years and is consistently reviewing the recession-fighting toolkit to shield the U.S. economy from further downturns. What’s more, the Fed in its 2019 year-end meeting announced that it will hold interest rates steady throughout 2020.

U.S. manufacturing contracted again in November, for the fourth straight month due to the trade war but Fed’s monetary easing seems to have helped the Industrial Select Sector SPDR Fund (XLI) rise 26.1% so far this year.

Similarly, the technology sector, which has high exposure to China has borne the brunt of the trade tussle. Nonetheless, the Technology Select Sector SPDR Fund (XLK) has gained 45.6% so far this year.

5 Stocks That Drove S&P 500’s Growth

As the headwinds from protracted trade war and Brexit subside, stocks will make solid gains and lift the S&P 500 to new record highs. But, these five stocks have been the top performers of the broader index and contributed in the index’s gain in 2019. We have shortlisted five stocks that flaunts Zacks Rank #1 (Strong Buy) and 2 (Buy) and has gained higher than the S&P 500’s gain so far this year.

Moreover, these stocks have a positive growth estimate for the current year and the next year and have surpassed their industry’s growth.

Lam Research Corporation (NASDAQ:LRCX) designs, manufactures, markets, refurbishes and services semiconductor processing equipment used in the fabrication of integrated circuits. The company’s expected earnings growth rate for the current year is 4.5% against the Zacks Semiconductor Equipment - Wafer Fabrication industry’s projected earnings decline of 6.4%. The Zacks Consensus Estimate for the company’s current-year earnings has advanced 11.9% over the past 60 days.

Lam Research, a Zacks Rank #2 company, has outperformed the S&P 500 so far this year (+105.5% versus +18.2%).

Target Corporation (NYSE:TGT) is a general merchandise retailer that offers beauty and household essentials, apparel, accessories, home décor products, electronics, toys, seasonal offerings and other merchandise. The company’s expected earnings growth rate for the current year is 18.4% compared with the Zacks Retail - Discount Stores industry’s projected earnings growth of 9.3%. The Zacks Consensus Estimate for the company’s current-year earnings has advanced 3.7% over the past 60 days.

Target Corporation, a Zacks Rank #1 company, has outperformed the S&P 500 so far this year (+89.6% versus +18.2%). You can see the complete list of today’s Zacks #1 Rank stocks here.

KLA Corporation (NASDAQ:KLAC) designs, manufactures and markets process control, chips and wafer manufacturing products for the semiconductor and related nano-electronics industries. The company’s expected earnings growth rate for the current year is 16.8% compared with the Zacks Electronics - Miscellaneous Products industry’s projected earnings growth of 9.5%. The Zacks Consensus Estimate for the company’s current-year earnings has advanced 4% over the past 60 days.

KLA Corporation, a Zacks Rank #2 company, has outperformed the S&P 500 so far this year (+89.3% versus +18.2%).

Applied Materials, Inc. (NASDAQ:AMAT) is a Zacks Rank #1 company that provides manufacturing equipment, services and software to the semiconductor, display and related industries. The company’s expected earnings growth rate for the current year is 24% against the Zacks Semiconductor Equipment - Wafer Fabricationindustry’s projected earnings decline of 6.4%. The Zacks Consensus Estimate for the company’s current-year earnings has advanced 14.2% over the past 60 days.

Applied Materials has outperformed the S&P 500 so far this year (+79.1% versus +18.2%).

Global Payments Inc. (NYSE:GPN) provides payment technology and software for card, electronic check, and digital-based payments. The company’s expected earnings growth rate for the current year is 18.9% compared with the Zacks Financial Transaction Services industry’s projected earnings growth of 9.2%. The Zacks Consensus Estimate for the company’s current-year earnings has advanced 1.2% over the past 60 days.

Global Payments, a Zacks Rank #2 company, has outperformed the S&P 500 so far this year (+75.7% versus +18.2%).

Zacks Top 10 Stocks for 2020

In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2020?

These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the New Zacks Top 10 Stocks >>