S&P 500 Peaks To An All-time High Courtesy These 5 Stocks

U.S. stocks posted their biggest rally since the U.S. presidential election, leading the S&P 500 to an all-time high. The broad-stock benchmark index’s post-election rally has been mostly underpinned by hopes that Trump will follow his market-friendly policies including boosting infrastructure outlays and trimming taxes for the wealthy. Traditional selling patterns that mostly occur at the end of the year, meantime, aren’t happening as investors bet such lower taxes under a Trump administration will propel growth.

OPEC’s decision to cut oil production for the first time since 2008 also added to the euphoria, while holiday season sales gained ground. Corporate earnings are too on the mend. The rate of U.S. economic growth has accelerated and the labor market continues to strengthen. Banking on these encouraging trends, we have focused on five top stocks that have propelled the S&P 500 higher.

S&P 500 Hits a New High

The S&P 500 closed at a record high of 2,241.35 on Dec 7, a gain of 29.12 points, or 1.3%. Almost all the sectors in the S&P 500 ended in the green, driven by expectations of pro-growth policies from Trump. In fact, the S&P 500 index has climbed 5.2% since the U.S presidential election.

Trump’s policies particularly had a positive impact on financial and industrial companies. The Financial Select Sector SPDR (XLF) and Industrial Select Sector SPDR (XLI) increased 17.5% and 10.7%, respectively, since the election. Giant investment bank Goldman Sachs (NYSE:GS) climbed 29.5% while J.P. Morgan Chase & Co (NYSE:JPM) was up about 20.3%. Industrial behemoth Caterpillar Inc. (NYSE:CAT) jumped 16.2% since the election.

Trump’s Pro-Growth Policy

While analysts have cited several reasons for the S&P 500’s solid performance, Trump’s win has been a major contributing factor. One of his priorities as a president is to spend substantially on U.S. infrastructure, a stimuli that will benefit companies that focus on the domestic economy. Trump has vowed to “fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals”. He has promised to double infrastructure spending from what his competitor Hillary Clinton had assured. This puts his proposed spending at around $550 billion, while Clinton had projected $275 billion over the next five years (read more: 4 Stocks to Gain From Trump's Infrastructure Push).

When it comes to defense spending, Trump has promised greater outlays and troop expansion (read more: 4 Defense Stocks to Buy on Trump Victory).

Investors turned to banks as the regulatory burden is likely to ease under Trump presidency. One such change will be the raising of the minimum asset threshold for banking behemoths to $250 billion from $50 billion, which will lend more flexibility, boost valuations, strengthen consolidation and increase lending. Trump, in the meantime, views the Dodd-Frank regulatory overhaul as a harsh measure, especially, on smaller banks. Trump has also called for repealing parts of the Dodd-Frank Act, which has for a considerable period of time limited operational flexibility (read more: 5 Stocks to Buy as Trump Raises Hopes for Banking Sector).

OPEC Agrees to Cut Output

OPEC’s cartel agreed on Nov 30 to trim output to 32.5 million barrels per day -- at the low end of a preliminary agreement struck in September. The landmark OPEC deal had a massive impact on the energy markets, sending crude prices hovering close to the $50 a barrel mark.

While the entire sector trended higher since the announcement, the independent oil explorers and producers – whose revenues are directly associated with crude price – have been among the best performing stocks. In fact, shares of oil finders like Whiting Petroleum Corp. (NYSE:WLL) , Oasis Petroleum Inc. (NYSE:OAS) and Marathon Oil Corp. (NYSE:MRO) surged more than 20% since the historic agreement, while the broader Energy Select Sector SPDR (XLE (NYSE:XLE)) advanced above 4% (read more: 5 Best Small-Cap Energy Stocks Up 10% Since OPEC's Decision).

Holiday Season Sales Surge

Holiday spending, in the meantime, rose 9% during Thanksgiving and Black Friday combined, compared with the same two-day period last year, according to First Data. As per Adobe Digital Insights, Cyber Monday online sales increased 12.1% this year compared to 2015, buoyed by massive growth in mobile traffic and sales (read more: 4 Top eCommerce Stocks for the Holiday Season).

Online sales have also been surpassing traditional retail sales for quite some time now. Lower-priced goods, free shipping and product availability are the primary reasons as to why consumers are more inclined to shop online during this holiday season. Best of all, customers can place orders from the comfort of their homes or at work. Consumers stocks are broadly trending higher this shopping season, with the consumer discretionary firms in the S&P 500 gaining 1.6% since the Thanksgiving holiday.

5 Stocks that Pushed the S&P 500 Higher

Barring the aforementioned booming sectors that lifted the S&P 500 to record high, some railroads and shippers also benefited from the rally in commodities. The economy is showing signs of strength, with the gross domestic product accelerating at its fastest pace in two years in the third quarter.

Banking on such bullish trends, let’s look at those firms that are helping to drive the S&P 500 to this new high. These stocks also flaunt a Zacks Rank #1 (Strong Buy) or #2 (Buy) and have a VGM score of ‘A’ or ‘B’. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of the stocks and select winners.

Regions Financial Corporation (NYSE:RF) provides banking and bank-related services. Regions Financialhas a Zacks Rank #2 and a VGM score of ‘B’. The company has surged 31.9% since the presidential election. The expected growth rate for the current year is 13.9%, more than the industry’s return of 12.3%. The Zacks Consensus Estimate for its current year earnings increased 4.8% over the last 60 days.

Harman International Industries, Incorporated (NYSE:HAR) designs and engineers connected products and solutions for automakers, consumers, and enterprises. Harman has a Zacks Rank #2 and a VGM score of ‘B’. The company has soared 30.2% since the presidential election. The expected growth rate for the current year is 14.1%, in contrast to a negative return of the industry. The Zacks Consensus Estimate for its current year earnings increased 3.8% over the last 60 days.

Best Buy Co., Inc. (NYSE:BBY) operates as a retailer of technology products, services, and solutions. Best Buy has a Zacks Rank #1 and a VGM score of ‘A’. The company has climbed 24.3% in the last one month period. The expected growth rate for the current year is 17.7% whereas the industry is expected to yield a negative return. The Zacks Consensus Estimate for its current year earnings increased 7.6% over the last 60 days.

Target Corporation (NYSE:TGT) operates as a general merchandise retailer. The company has jumped 13.9% in the last one month period. The expected growth rate for the current year is 11.2%. The Zacks Consensus Estimate for its current year earnings increased 5% over the last 60 days. Target has a VGM score of ‘A’ and has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ross Stores, Inc. (NASDAQ:ROST) operates off-price retail apparel and home fashion stores. Ross Stores has a Zacks Rank #2 and a VGM score of ‘B’. The company has climbed 11.2% in the last one month period. The expected growth rate for the current year is 11.9%. The Zacks Consensus Estimate for its current year earnings increased 2.2% over the last 60 days.

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