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S&P 500 Logs Best 1H in 22 Years: Top-Performing Stocks

Sanghamitra Saha

What economic slowdown? What tariff tensions? The S&P 500 recorded its best first half of a year since 1997, soaring 17.3% and reaching an all-time high. All 11 of the S&P 500 sectors rose in the first half of 2019.

The six months ended June 2019 was all about a patient Fed and cues of development in the U.S.-China trade relation. Though things turned sour between the United States and China in the second quarter and both slapped increased tariffs on each other, dovish central bank comments took Wall Street on a northbound trajectory.

Dovish Fed comments brought down bond yields materially in June. Yield on the benchmark 10-year U.S. Treasury yield stood at 2.00% on Jun 28, down from 2.66% at the start of the year. Parts of the yield curve also inverted amid recessionary fears in the first half, which is why the Fed signaled rate cuts this year. Investors should note that the Fed’s accommodative stance is beneficial to the overall stock market.

Moreover, the health of the U.S. economy is not that worrisome. In its June meeting, the Fed upgraded its forecast for 2020 real GDP growth from 1.9% in March to 2.0% but maintained the 2019 and 2021 growth forecast at 2.1% and 1.8%, respectively. Unemployment was guided down to 3.6% from 3.7% for 2019, 3.7% from 3.8% for 2020 and 3.8% from 3.9% for 2021.

As a result, investors have shown more interest in cyclical stocks of late. Willie Delwiche, investment strategist at R.W. Baird, noted that investors’ interest in cyclical sectors indicate there is no “imminent threat to the economic cycle.” The economy will log 10 years of expansion in July, the longest on record.

The first-half rally was mainly driven by tech stocks (up 26%) followed by consumer discretionary, industrials, real estate and materials. Moderate strength in the greenback and the emergence of cutting-edge technology drove the tech sector. Many tech unicorn IPOs including Uber, Lyft and Pinterest also helped the ascent (read: Top Sectors of 1H & Their Top Stocks).

Against this backdrop, below we highlight a few S&P 500 stocks that have at least a Zacks Rank #3 (Hold) and surged the most in the first half.

Coty Inc. COTY – Up 104.3%

The Zacks Rank #3 (Hold) company manufactures, markets and distributes beauty products. It comes from a top-ranked Zacks industry (top 23%).

Xerox Corporation XRX – Up 79.2%

The Zacks Rank #3 company is the world's leading enterprise for business process and document management. It belongs to a top-ranked Zacks industry (top 38%).

Chipotle Mexican Grill Inc. CMG – Up 69.7%

The Zacks Rank #1 (Strong Buy) company operates Chipotle Mexican Grill restaurants, which serve a focused menu of burritos, tacos and burrito bowls (a burrito without the tortilla) and salads made with fresh ingredients. It hails from a top-ranked Zacks industry (top 40%).

Advanced Micro Devices Inc. AMD – Up 64.5%

The Zacks Rank #3 company is a global semiconductor company with a leadership position in the industry. It comes from a top-ranked Zacks industry (top 23%).

Cadence Design Systems Inc. CDNS – Up 62.9%

The Zacks Rank #3 company is the largest supplier of electronic design technologies, methodology services and design services. It hails from a top-ranked Zacks industry (top 41%).

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

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Cadence Design Systems, Inc. (CDNS) : Free Stock Analysis Report
Coty Inc. (COTY) : Free Stock Analysis Report
Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report
Xerox Corporation (XRX) : Free Stock Analysis Report
Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report
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