Despite a raging pandemic and a global recession, the S&P 500 index is up more than 12% since the start of 2020. At its latest record high close of 3635.41 on Tuesday, the index had climbed some 405 points this year. Add on dividends and the S&P 500 had returned more than 14% year to date.
That’s one big thing that most investors can be thankful for this Thanksgiving. The S&P 500 is the most tracked index in the world by exchange-traded funds. The SPDR S&P 500 (ticker: SPY), iShares Core S&P 500 (IVV), and Vanguard S&P 500 (VOO) ETFs have roughly $725 billion in combined assets. No matter if you’re a novice investor or a seasoned pro, it is likely you have some long exposure to the S&P 500 in your 401(k) or portfolio.
Up 195% since its listing in March, Carrier Global (CARR) is the best-performing stock in the S&P 500 this year. It was formed from the merger of Raytheon and United Technologies —and the subsequent three-way split into Carrier, Raytheon Technologies (RTX), and Otis Worldwide (OTIS).
But Carrier hasn’t been doing the heavy lifting in the S&P 500’s overall rise this year. Even with a market value of roughly $33 billion after this year’s meteoric rise, the company makes up a tiny percentage of the S&P 500’s total value. Carrier’s nearly threefold increase has contributed just 2.5 points to the index in 2020, or 0.6% of the gain this year.
That’s because the S&P 500 is a market-capitalization-weighted index. A 1% rise in a $100 billion company’s stock adds 10 times as many points to the benchmark as a 1% rise in a $10 billion company’s stock.
The second-best performer in the S&P 500 in 2020 has been Nvidia (NVDA), which is up 124% year to date. The semiconductor firm has a much heftier market value than Carrier, at a recent $328 billion. Its 2020 surge has added 21.6 points to the S&P 500, or about 5.3% of this year’s rally—the fifth-largest contribution overall.
The next runner-up is L Brands (LB), whose stock is up 117% year to date. But that translates to just 0.6 additional points in the S&P 500. Like Carrier, its record year hardly made a dent in the index.
Tesla (TSLA), up 586% since the start of the year, isn’t in the S&P 500 yet; it will join the index in December. Some other top performers this year, like Zoom Video Communications (ZM) or Peloton Interactive (PTON), also aren’t in the S&P 500.
More than half of the S&P 500’s point gain in 2020 is thanks to three highflying and highly valued stocks: Apple (AAPL), Amazon.com (AMZN), and Microsoft (MSFT). Their stocks are up 60%, 73%, and 37%, respectively, year to date, and have a combined market value of some $5.2 trillion. Their rallies have added 208 points to the S&P 500 this year.
Google-parent Alphabet (GOOGL) and Facebook (FB) are responsible for another 51 points of the S&P 500’s 2020 rise. Whether you’re bullish on big tech or not, the majority of the index’s increase this year has come thanks to those five stocks.
More big point contributors to the S&P 500 in 2020 through Thanksgiving have been a handful of other large technology stocks. PayPal Holdings (PYPL) is up 96%, adding 14.8 points; Salesforce.com (CRM) is up 63%, adding 11.1 points; Netflix (NFLX) is up 50%, adding 8.5 points; and Qualcomm (QCOM) is up 68%, adding 8.0 points.
S&P 500's Biggest Point Contributors In 2020
Source: Bloomberg
(If you cannot view the table above, please click here.)
The top detractors from the S&P 500 in 2020 include several banks: Wells Fargo (WFC) is down 45% this year, subtracting 11 points, while Bank of America (BAC), JPMorgan Chase (JPM), and Citigroup (C) have each cost the S&P 500 about 6 points.
The greatest drag on the index this year has been Exxon Mobil stock (XOM), down 36%, or 12.8 points. Fellow energy industry firms Chevron (CVX) and Schlumberger (SLB) subtracted another 7.7 points combined. AT&T (T), Boeing (BA), and Intel (INTC) round out the top 10 detractors.
S&P 500's Biggest Point Detractors In 2020
Source: Bloomberg
(If you cannot view the table above, please click here.)
Write to Nicholas Jasinski at nicholas.jasinski@barrons.com
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November 26, 2020 at 07:00PM
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Apple, Amazon.com, and 8 Other Stocks to Be Thankful For This Thanksgiving - Barron's
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