The S&P 500 Index has seen an incredible rally this year, hitting new milestones and gaining 13.6% so far. The index hit the 5,300 threshold last month and now surpassed the 5,400 level for the first time, underscoring strong confidence. The recent rally was driven by weaker than expected inflation data, despite hawkish comments from the Fed (read “ETFs to watch for upcoming S&P 500 shakeup”).
SPDR S&P 500 ETF Trust SPY, a proxy version of the S&P 500 Index, is up 13.3% year to date. Many stocks are driving this ETF, but we’ll look at the five stocks driving the gains. Super Microcomputer Corporation SMCI, NVIDIA Corporation NVDA, Vistra Energy VSTs, Constellation Energy Corporation CEG and First Solar Co., Ltd. FSLR.
U.S. inflation slowed for a second straight month in May. The Consumer Price Index rose 3.3% year-over-year in May, down from a 3.4% year-over-year increase in April. On a monthly basis, prices were flat for the first time since July 2022. Easing inflation indicates the economy is stabilizing, and interest rates may be falling.
At the latest FOMC meeting that ended yesterday, US policymakers expected only one rate cut this year, and forecast four cuts in 2025. The Fed changed the wording of its statement to note that “some further progress has been made towards the Committee’s 2% inflation objective.” The previous statement had noted “no” further progress. The Fed meeting suggests a period of further higher interest rates is on the way, which will continue to be a positive impetus due to the low volatility nature of the S&P 500 (see “5 Large ETFs at the Frontline of This Year’s Market Rally”).
Moreover, strong profit growth and the boom in artificial intelligence (AI) are driving stock prices higher. In particular, the “Magnificent Seven” are the biggest drivers of growth in the technology sector and the S&P 500 as a whole, currently accounting for 31% of the S&P 500.
Let’s take a closer look at the fundamentals of SPY.
Focus on SPY
The SPDR S&P 500 ETF Trust holds a basket of 503 stocks, with each stock accounting for less than 7.1% of assets, suggesting that the stocks are well balanced and avoiding overconcentration. The fund is broadly diversified, with double-digit allocations to information technology, financials, healthcare, and consumer discretionary.
The SPDR S&P 500 ETF Trust has $541 billion in assets under management, charges an annual fee of 9 basis points, trades an average of 51 million shares per day, has a Zacks ETF Rank #2 (Buy) and a Moderate Risk Outlook (see all Large-Cap Blend ETFs here).
Below, we’ll take a look at the top five ETFs that performed best.
SPY’s Best Performing Stocks
Super Micro The company designs, develops, manufactures, and sells energy-efficient, application-optimized server solutions based on the x86 architecture. The company’s shares have surged 172.5% this year and represent 0.08% of the SPY portfolio.
Super Micro’s expected earnings growth rate for the fiscal year ending June 2025 is 44.6% and it has a Zacks Rank #3 (Hold).
NVIDIA is a world leader in visual computing technology and the inventor of the graphics processing unit (GPU). The company’s shares have risen 152.8% this year and are forecast to grow 106.1% for the fiscal year ending January 2025.
Nvidia represents 6.6% of SPY’s assets and currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Vistra Energy is an energy company that provides power and generation, distribution, and transmission solutions. The company’s shares have risen 135.1% so far this year. It represents 0.07% of SPY Portfolio’s assets.
Vistra Energy has expected earnings growth of 5.8% this year and carries a Zacks Rank #1.
Constellation Energy The company produces and sells electricity, natural gas, renewable energy, and other energy-related products and services. The company’s shares have risen 86.6% so far this year. It represents 0.15% of SPY Portfolio’s assets.
Constellation Energy has expected earnings growth of 52.1% this year and a Zacks Rank #2 (Buy) (see AI-Powered ETFs Making the Most of the Utilities Sector).
First Solar is the world’s largest thin-film PV solar module manufacturer and the largest PV solar module manufacturer in the Western Hemisphere. The company’s shares have risen 74.5% so far this year and represent 0.07% of the SPY portfolio.
First Solar’s earnings are expected to grow a massive 75.1% this year. The stock carries a Zacks Rank #3.
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Constellation Energy Corporation (CEG) : Free Stock Analysis Report
First Solar, Inc. (FSLR) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
SPDR S&P 500 ETF (SPY): ETF Research Report
Super Micro Computer, Inc. (SMCI) : Free Stock Analysis Report
Vistra Corp. (VST) : Free Stock Analysis Report
