Less than two months ago, Wall Street was facing a global market sell-off and fears of a U.S. recession. However, the S&P 500 is now on track for its fourth positive quarter in a row, marking the longest streak since 2021. The best-performing stocks during the third quarter were outside the “Magnificent Seven” and AI-winner complexes, showing a broadening of investment themes. The generative AI boom has not fizzled out, but other factors are coming into play in the market.
During the market downturn in early August, driven by weak U.S. economic data and the implosion of the yen carry trade, the S&P 500 turned negative for the third quarter, causing uncertainty about the near-term outlook. However, the sentiment has drastically improved since then, with September poised to be the first positive month for the S&P 500 in five years. This turnaround was unexpected, but factors such as the anticipation of interest rate cuts and improved economic conditions have boosted investor confidence.
The top five stocks that performed well in the July-to-September period include Stanley Black & Decker, Starbucks, GE Healthcare, Best Buy, and Home Depot. Stanley Black & Decker saw a significant increase in its stock price as investors anticipated the Fed’s easing campaign, benefiting from lower interest rates stimulating activity in the housing sector. Starbucks’ stock surged after the hiring of new CEO Brian Niccol, who is expected to turn the company around similar to what he did for Chipotle. GE Healthcare has performed strongly due to lower interest rates making it easier to finance purchases of its expensive machines.
Best Buy and Home Depot, both beneficiaries of increased housing sector activity, have also seen their stocks rise during the third quarter. Best Buy’s earnings report and the general replacement cycle for electronics have contributed to its stock price increase. Home Depot, which has a strong exposure to professional customers in the housing sector, has also benefitted from the uptick in activity. Overall, these stocks reflect the diverse factors driving the market and investor sentiment in the current environment.
As a subscriber to the CNBC Investing Club with Jim Cramer, traders receive trade alerts before Jim makes a trade, following specific guidelines regarding the timing of trades. It is important to note that there is no guaranteed outcome or profit in investing, and investors should carefully consider risks and market conditions before making investment decisions. The performance of the top five stocks in the third quarter showcases the resilience of the market and the ability of certain companies to thrive in challenging economic environments, offering opportunities for investors to capitalize on emerging trends and themes.
