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Top 5 S&P 500 Stocks That Helped the Index Gain in 2020

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The S&P 500 index closed at 3,709.41 on Dec 18, down 0.4% on the day. Markedly, the index has returned 14.8% year to date and 69.2% from the Mar 23 low of 2,191.86. The S&P 500 has outperformed Dow Jones Industrial average, which is up 5.8% but has lagged Nasdaq’s 42.2%.

The stupendous rally has been primarily driven by unprecedented government stimulus, near-zero interest rates in the United States, reopening of U.S. and global economies post coronavirus-induced lockdowns and shelter-in-place guidelines, and a resilient technology space.

Notably, by keeping interest rates low for a foreseeable future, the Federal Reserve is supporting the coronavirus outbreak-ravaged economy. The lower rates will make it easier for consumers as well as businesses to avail loans, thereby driving consumption.

Moreover, change in consumer behavior and lifestyle that has been necessary to adjust with the “New Normal” provided a massive boost to e-commerce, contactless payment and delivery services. Stay-at-home drove media consumption and video gaming. The spur in work-from-home and online learning benefited tech service providers.

The approval of vaccines developed by Pfizer (PFE - Free Report) and its German partner BioNTech as well as Moderna is expected to further enhance the S&P 500’s near-term prospects. The approval of $900 billion stimulus also bodes well for the index. (Read More: US Congress Agrees on New Stimulus: 7 Top-Ranked Stocks)

These 5 Stocks Lead in Driving S&P 500 to a Record High

Apple (AAPL - Free Report) , Microsoft (MSFT - Free Report) and Amazon (AMZN - Free Report) are the top three constituent in terms of index weight in the S&P 500, accounting for roughly 16.5%, on a combined basis. Shares of these companies have witnessed robust growth so far this year, thereby playing a huge role in driving S&P 500’s gains.

Apart from these, NVIDIA (NVDA - Free Report) and Etsy (ETSY - Free Report) have been among the most prolific performers in the S&P 500 index in 2020.

Let’s dig deep to determine the major drivers of these five top performers.

Year-to-Date Performance

 

NVIDIA shares are up 122.3% year to date. This Zacks Rank #1 (Strong Buy) company is benefiting from the pandemic-induced work-from-home and learn-at-home wave. You can see the complete list of today’s Zacks #1 Rank stocks here.

NVIDIA has witnessed solid demand for GeForce desktop and notebook GPUs, which is boosting gaming revenues. Moreover, a surge in Hyperscale demand is a tailwind for the company’s Data Center business.

NVIDIA has a market cap of $328.61 billion. The Zacks Consensus Estimate for its fiscal 2021 earnings is pegged at $9.71 per share, having been revised 6.4% upward in 60 days’ time.

Etsy’s shares have risen a whopping 326% year to date. This e-commerce service provider has been benefiting from accelerating Marketplace and Services revenues. Solid momentum across active sellers and buyers remains a major positive. Further, the coronavirus-induced e-commerce boom and increasing mask sales are tailwinds.

This $24.05-billion company carries a Zacks Rank #3 (Hold), at present. The Zacks Consensus Estimate for its 2020 earnings is pegged at $2.20 per share, having been revised 4.1% upward in 60 days’ time.

Amazon.com shares are up 73.2% year to date. The e-commerce giant is gaining on solid Prime momentum owing to ultrafast delivery services. Further, coronavirus-led spike in online orders continues to be a major tailwind. Also, solid growth in its online stores sales as well as surge in online grocery shopping is a positive.

This $1.61-trllion company currently has a Zacks Rank #3. The consensus mark for 2020 earnings is pegged at $34.56 per share, having been revised 8.5% upward in 60 days’ time.

Apple shares are up 72.5% year to date. This Zacks Rank #3 company is benefiting from continued momentum in the Services segment, driven by robust performance by App Store, Apple Music, video and cloud services. Moreover, demand remains healthy for other Apple devices, including iPad, Mac and Wearables.

The Zacks Consensus Estimate for this $2.15-trillion company’s fiscal 2021 earnings is pegged at $4.03 per share, having moved 0.5% north in the past 60 days.

Microsoft’s shares are up 38.6% year to date. This Zacks Rank #2 (Buy) company is benefiting from momentum in Azure, impressive Teams user growth triggered by coronavirus-led digital transformation, work-from-home, online learning wave and tele healthcare trends.

The Zacks Consensus Estimate for this $1.65-trillion company’s fiscal 2021 earnings is pegged at $6.73 per share, having moved 5.8% north in the past 60 days.

Zacks Top 10 Stocks for 2021

In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?

These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the New Zacks Top 10 Stocks >>

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