May was only a so-so month for most S&P 500 investors. But some investors who hit the tech-stock boom just right this month did really well.
All told, had you invested $10,000 in January and reinvested your money into the top-performing stock currently in the S&P 500 each month in 2023, including Nvidia in May, you'd have $44,175 now, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
That's an impressive five-month gain of more than 342%. It's quite a feat given the S&P 500 is up just 9.4% so far this year. The same $10,000 invested in the S&P 500 would be worth just $10,940 now. That's a gain of just $940. May also extended a big bounce in massive tech stocks, especially any associated with AI.
Did May Reinvigorate The S&P 500?
Hindsight is 20-20. And clearly, few if any investors could have picked the top stock in each of the past five months, as it's not a repeatable strategy. But the staggering numbers are a reminder to investors that gains can be found in a choppy market.
The S&P 500 itself wasn't a huge contributor in the month of May. But then again, the month of May isn't normally a great one for the S&P 500, says the "Stock Trader's Almanac." The S&P 500 gained 0.7% in May 2023. That's slightly better than the o.2% average gain in the month of May going back to 1950, says the Almanac. May is the eight best month in terms of returns historically.
Top S&P 500 Stock Of May: Nvidia
AI was all the rage in May. Nvidia surged more than 44% during the month as investors applauded the company's first-quarter results.
Nvidia, which makes computer chips that function well for AI, reported adjusted April quarter profit of $1.09 a share. That was nearly 20% lower than what the company earned a year ago. But it's all about the company's outlook. Analysts now think Nvidia's profit will surge more than 132% this fiscal year to $7.76 a share.
Nvidia's surge is noteworthy, too, as it carries on the theme that's working so well for S&P 500 investors now: The surge in large technology stocks. Just six giant tech stocks, all of which are also in the Nasdaq 100, are driving 80% of the S&P 500's gains this year.
Reading The S&P 500 This Year
Each month's twists and turns reveal just how challenging the S&P 500 is making things for investors. That's unless you're invested in the megacap techs.
The year kicked off with a bang. Not only did the S&P 500 jump 6.2% in just January, some winners during the month soared even more. Warner Bros. Discovery (WBD) added more than 56% in just a single month.
And then came February with a pullback. Optimism that the Fed finally cooled inflation with its rate hikes is giving way to fear that more rate increases are to come. Three quarters of the stocks in the S&P 500 dropped in February. Catalent (CTLT), a health care company, was a rare standout by gaining 25.6% during the month.
The big question, though, is whether big-cap technology stocks will continue to outperform in June. The Nasdaq 100 rocketed more than 8% just during May. And the market tends to do fairly poorly in June, offering a bit of a headwind. Historically, the month of June is the ninth-worst month of the year for the S&P 500.
But just mentioning AI might be enough to keep investors interested.
How To Turn $10,000 Into $44,175 In 5 Months
| Month | Top S&P 500 stock | Symbol | Stock monthly % gain | Sector | S&P 500 % monthly ch. | Beg. bal. | Cumulative value of $10,000 investment in January reinvested in best stock each month |
|---|---|---|---|---|---|---|---|
| January | Warner Bros. Discovery | 56.3% | Communication Services | 6.2% | $10,000 | $15,630 | |
| February | Catalent | 25.6% | Health Care | -2.3% | $15,630 | $19,631 | |
| March | Intel | 28.7% | Information Technology | 2.0% | $19,631 | $25,265 | |
| April | Chipotle Mexican | 21.0% | Consumer Discretionary | 1.5% | $25,265 | $30,571 | |
| May | Nvidia | 44.5% | Information Technology | 0.7% | $30,571 | $44,175 |
Sources: S&P Global Market Intelligence, IBD
Follow Matt Krantz on Twitter @mattkrantz
