5 Stocks in ETF That Defied S&P 500's Longest Slide Since 2020
The S&P 500 has logged its third-straight month of decline, falling 3% in October. With this, the index is down 9.4% over the last three months, representing its longest monthly losing streak since March 2020, according to Dow Jones Market Data.
SPDR S&P 500 ETF Trust SPY, the proxy version of the S&P 500 Index, shed 8.7% over the past three months. Despite the losses, some stocks in the ETF stood tall. We have highlighted five stocks that were in the green in the same time period and have a Zacks Rank #1 (Strong Buy) or 2 (Buy). These include The Progressive Corporation PGR, Axon Enterprise Inc. AXON, Cboe Global Markets Inc. CBOE, Palo Alto Networks, Inc. PANW and Constellation Energy Corporation CEG.
The S&P 500 officially entered into correction territory last week, marking a 10% decline from its most recent high reached on Jul 31. The plunge was due to a stricter policy stance by the Federal Reserve, escalating tensions in the Middle East and concerns surrounding the US government's deficit debate that could potentially lead to a government shutdown.
The sharp losses in the index came amid a rapid rise in Treasury yields. The Fed’s "higher for longer" interest rate outlook has pushed yields higher, with Treasury yields hovering near the highest levels in 16 years. This, in turn, has raised concerns about the impact of higher debt costs on business development and overall economic growth. Further, the ongoing Israel-Hamas conflict has resulted in global uncertainties, leading to risk-off trade.
However, the world's biggest economy emerged stronger than expected in the third quarter, defying all the challenges. The economy expanded at the fastest pace in nearly two years, with GDP rising 4.9% annually, more than twice than 2.1% growth in the second quarter. However, the breakneck pace of growth is expected to ease as higher long-term borrowing rates coupled with the Fed’s short-term rate hikes will cool down spending by businesses and consumers (read: 5 ETFs to Bet on Highest GDP Growth in Nearly 2 Years).
Let’s take a closer look at the fundamentals of SPY.
SPY in Focus
SPDR S&P 500 ETF Trust holds 503 stocks in its basket, with each accounting for no more than 7.2% of the assets. This suggests a nice balance across each security and prevents heavy concentration. The fund is widely spread across sectors with information technology, healthcare, financials and consumer discretionary accounting for a double-digit allocation each.
SPDR S&P 500 ETF Trust has AUM of $381.8 billion and charges 9 bps in fees per year. The product trades in a heavy volume of around 75 million shares a day on average, ensuring higher liquidity with a tight bid/ask spread, leading to lower trading costs for investors. SPY has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (see: all the Large Cap Blend ETFs here).
Below, we have highlighted the abovementioned five best-performing stocks in the ETF.
Best-Performing Stocks of SPY
The Progressive is one of the major auto insurers in the country. It is a leading independent agency writer of private passenger auto coverage, and the market share leader in motorcycle products since 1998. The stock has surged about 22% over the past three months. It has an estimated earnings growth rate of 25.12% for this year.
PGR makes up for 0.26% of the assets in SPY and has a Zacks Rank #2 (Buy). The stock has a VGM Score of B. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Axon develops and manufactures weapons for sale to U.S. state and local governments, the U.S. federal government, international government customers and commercial enterprises. The stock has gained about 12% over the past three months and accounts for 0.04% of the total assets in SPY portfolio.
Axon has an estimated earnings growth rate of 62.10% for this year and a Zacks Rank #2 (read: Defense Stocks & ETFs Soar Amid Rising Geopolitical Tensions).
Cboe Global is one of the largest stock exchange operators by volume in the United States and a leading market globally for ETP trading. The stock has risen about 12% and makes up 0.05% of the SPY portfolio.
Cboe Global has an estimated earnings growth rate of 6.2% for this year. It has a Zacks Rank #2 and a Momentum Score of B.
Palo Alto Networks offers network security solutions to enterprises, service providers and government entities worldwide. The stock has gained about 11% over the past three months and makes up for 0.21% of the SPY portfolio.
Palo Alto Networks has an estimated earnings growth rate of 20.3% for the fiscal year ending July 2024 and a Zacks Rank #2. It has a solid Growth Score of B.
Constellation Energy generates and markets electricity. It sells natural gas, renewable energy and other energy-related products and services. The stock was up 9% over the past three months and accounts for a 0.10% share in the SPY portfolio.
Constellation Energy has an estimated earnings growth rate of 1259.2% for this year and a Zacks Rank #1.
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Constellation Energy Corporation (CEG) : Free Stock Analysis Report
The Progressive Corporation (PGR) : Free Stock Analysis Report
Cboe Global Markets, Inc. (CBOE) : Free Stock Analysis Report
SPDR S&P 500 ETF (SPY): ETF Research Reports
Palo Alto Networks, Inc. (PANW) : Free Stock Analysis Report
Axon Enterprise, Inc (AXON) : Free Stock Analysis Report
