The S&P 500 declined for the fifth consecutive day on recession fears. The benchmark dropped 3.6% over the past week, marking the longest losing streak since Oct 12. SPDR S&P 500 ETF Trust (SPY – Free Report) , the proxy version of the S&P 500 Index, has plunged about 3.5% last week in the same time period.
Despite the decline, some of the stocks in SPY’s portfolio have risen. These are MarketAxess Holdings Inc. (MKTX – Free Report) , Etsy (ETSY – Free Report) , Netflix (NFLX – Free Report) , Exelon Corporation (EXC – Free Report) and Bath & Body Works Inc. (BBWI – Free Report) . These stocks have a Zacks Rank #3 (Hold) with positive estimated earnings growth for the next year.
Investors continue to worry over Federal Reserve rate hikes and the prospect of a looming recession. The bouts of latest data — hotter-than-expected ISM services and stronger jobs — have put a damper on hopes that the Federal Reserve would ease the pace of its interest rate hikes amid recent signs of ebbing inflation. Investors had hoped that the Fed might slow the pace of interest rate hikes after cooling inflation data (read: 4 Sector ETFs to Play Upbeat November Jobs Data).
The economy added 263,000 jobs in November, marking another strong month of job growth. The unemployment rate remained at 3.7%, close to a 50-year low, while average hourly earnings jumped 0.6% from the prior month and 5.1% from the year-ago month. Higher wages will add to higher inflation. Meanwhile, business activity jumped the most since March 2021 in November, suggesting that the largest part of the economy remains resilient. The Institute for Supply Management’s gauge of services rose to 56.5 last month from 54.4 in October.
Let’s take a closer look at the fundamentals of SPY.
SPY in Focus
SPDR S&P 500 ETF Trust holds 503 stocks in its basket, with each accounting for no more than 6.5% of assets. This suggests a nice balance across each security and prevents heavy concentration. The fund is widely spread across sectors with information technology, healthcare, financials and consumer discretionary accounting for a double-digit allocation each.
SPDR S&P 500 ETF Trust has AUM of $371.8 billion and charges 9 bps in fees per year. The product trades in a heavy volume of around 79 million shares a day on average, ensuring higher liquidity with a tight bid/ask spread, leading to lower trading costs for investors. SPY has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (see: all the Large Cap Blend ETFs here).
Below we have highlighted the above-mentioned five best-performing stocks in the ETF.
Best-Performing Stocks of SPY
MarketAxess is a leading multi-dealer trading platform that offers institutional investors access to global liquidity in products like U.S. high-grade corporate bonds, emerging markets and high-yield bonds, European bonds, U.S. agency bonds, credit derivatives and other fixed-income securities. The stock has soared 11% over the past week.
MarketAxess has an estimated earnings growth rate of 15.1% for next year and a Zacks Rank #3 (Hold) and VGM Score of A. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Etsy is primarily an e-commerce service provider that operates a two-sided marketplace platform called Etsy.com. It has gained 10% in a week.
Etsy’s earnings are expected to grow a massive 195.8% for the next year. The stock carries a Zacks Rank #3 and a VGM Score of B.
Netflix is considered a pioneer in the streaming space. The company evolved from a small DVD-rental provider to a dominant streaming service provider, courtesy of its wide-ranging content portfolio and a fortified international footprint. The stock climbed 8.8% in a week.
Netflix has an expected earnings growth rate of 4.9% for next year and a Zacks Rank #3.
Exelon is a utility services holding company engaged in the energy generation, delivery and marketing businesses in the United States and Canada. It owns nuclear, fossil, wind, hydroelectric, biomass and solar generating facilities. The stock is up 7.2% in a week.
Exelon has an estimated earnings growth rate of 5.1% for the next year and a Zacks Rank #3. It has a solid Value Score of B.
Bath & Body Works is a specialty retailer and home to America’s Favorite Fragrances offering exclusive fragrances for the body and home, fragrance mist, body lotion and body cream, 3-wick candles, home fragrance diffusers and liquid hand soap (read: 5 ETFs to Bet On for This Holiday Season).
Bath & Body Works has gained 7.1%, and its earnings are expected to increase 19.7% for the next fiscal year (ending January 2024). The stock has a Zacks Rank #3 and a Value Score of B.
Read More: 5 Stocks in S&P 500 ETF That Gained Over Past Week – December 8, 2022