The S&P 500 surged 4.3% in May, its best month since February. The index surpassed the 5,300 milestone for the first time, showing strong confidence. This increase was driven by solid corporate earnings, bets on rate cuts by the Fed, and the ongoing AI boom.
The SPDR S&P 500 ETF Trust (SPY), which mirrors the S&P 500 Index, gained 2.5% in May. Five stocks within the ETF stood out with double-digit gains and Zacks Rank #1 (Strong Buy) or #2 (Buy): Gen Digital Inc. (GEN), Nvidia Corporation (NVDA), Vistra Energy Corp. (VST), NetApp (NTAP), and Bath & Body Works (BBWI).
Earnings in the first quarter of 2024 grew by 6%, the highest rate in nearly two years. NVIDIA’s strong earnings boosted optimism in the market, alongside the global AI boom.
Recent data indicates the U.S. economy is on track for solid GDP growth in the second quarter. Business activity grew at its fastest pace in over two years in May, with consumer confidence also increasing.
Wall Street has become more bullish on stocks, with three equity strategists raising their year-end targets for the S&P 500. The median target now stands at 5,250, up from 4,850 at the end of last year.
The SPY ETF holds 503 stocks with a well-balanced allocation across sectors. It has an AUM of $529.5 billion, charges 9 bps in fees annually, and has a Zacks ETF Rank #2 with a Medium risk outlook.
The top-performing stocks within the SPY ETF in May were Gen Digital, Nvidia, Vistra Energy, NetApp, and Bath & Body Works. These companies showed strong growth potential and solid rankings from Zacks.
Overall, the market outlook remains positive, with strong earnings and economic growth projections. Investors continue to show confidence in the stock market, with potential for further gains in the future.