The S&P 500 wrapped up 2024 with another solid gain of 23.3% after a 24.2% jump in 2023. This marks the two consecutive annual gains above 20% and the best two-year cumulative gain of 53.2% since 1997-98. The enthusiasm surrounding AI, rate-cut wave and Trump’s trade have been the major drivers.
SPDR S&P 500 ETF Trust SPY, the proxy version of the S&P 500 Index, gained 25.5%. While many stocks powered the ETF, we have highlighted four that more than doubled and have a solid Zacks Rank #1 (Strong Buy) or #2 (Buy). These are Palantir Technologies Inc. PLTR, Vistra Energy Corp. VST, NVIDIA Corporation NVDA, and United Airlines Holdings, Inc. (UAL). You can see the complete list of today’s Zacks #1 Rank stocks here.
The adoption of AI has propelled big tech stocks to new highs. The so-called "Magnificent Seven" stocks have been on a spectacular ride this year and are one of the big forces driving the broad market rally. The Magnificent Seven market-cap valuation surpassed $18 trillion for the first time ever, according to Dow Jones Market Data. With a combined weightage of 31% in the S&P 500, these stocks are poised to see more gains in 2025.
The Fed cut interest rates three times in 2024 but signaled a more cautious approach heading into 2025 amid sticky inflation. Lower rates reduce borrowing costs for mortgages, credit cards, and other consumer and business loans. These help businesses expand their operations more easily, resulting in increased profitability. This, in turn, stimulates economic growth and boosts the stock market.
President-elect Donald Trump’s win in November also proved a boon for the market, fueling hopes of deregulation, lower corporate tax rates and a focus on the U.S. economy, which has been resilient.
Though uncertainty surrounding Fed rate cuts and a new Donald Trump administration looms, Wall Street strategists expect strong trends to continue in 2025, with solid earnings expected from a wide array of companies and U.S. economic growth anticipated to remain resilient. The median year-end target for the S&P 500 among strategists tracked by Yahoo Finance sits at 6,600. This would represent about a 12% increase from the index's current level. The targets reach as high as Oppenheimer's 7,100 and as low as Stifel's 5,500 projection (read: S&P 500 to Climb in 2025? ETFs to Watch for Next Year's Rally).
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 8% of the assets. This suggests a nice balance across each security and prevents heavy concentration. The fund is widely spread across sectors with information technology, financials, consumer discretionary and healthcare accounting for a double-digit allocation each.
SPDR S&P 500 ETF Trust has an AUM of $626.4 billion and charges 9 bps in fees per year. It trades in an average daily volume of 38 million shares and has a Zacks ETF Rank #2 with a Medium risk outlook (see: all the Large Cap Blend ETFs here).
Below, we have highlighted the abovementioned five best-performing stocks in the ETF.
Best-Performing Stocks of SPY
Palantir Technologies builds and deploys software platforms for the intelligence community, principally in the United States. The stock soared 340.5% in 2024 and accounts for a 0.32% share in the SPY portfolio.
Palantir Technologies has an estimated earnings growth rate of 24% for 2025 and a Zacks Rank #2. It has a Growth Score of A.
Vistra Energy is an energy company that offers electricity and power generation, distribution and transmission solutions. The stock accounts for a 0.09% share in the ETF and has soared 258% so far this year.
Vistra Energy saw a solid earnings estimate revision of 6 cents over the past 30 days for 2025 and has an estimated growth of 36.8%. It has a Zacks Rank #1.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of graphic processing unit or GPU. The stock jumped 171.2% in 2024. It saw a solid earnings estimate revision of a couple of cents over the past 30 days for the fiscal year (ending January 2026) and has an estimated growth of 41.5%.
NVIDIA makes up 6.7% of the assets in SPY and currently has a Zacks Rank #2. It has a Growth Score of A (read: 5 Best Performing Stocks of the Top ETF of 2024).
United Airlines, through its subsidiaries, provides air transportation services in North America, Asia, Europe, Africa, the Pacific, the Middle East and Latin America. The company transports people and cargo through its mainline and regional fleets. The stock has risen 135.3% in 2024. It saw a solid earnings estimate revision of 20 cents over the past 30 days and has an estimated earnings growth of 15.20% for 2025.
United Airlines accounts for 0.06% of SPY's assets. It currently has a Zacks Rank #2 and a Momentum Score of A.
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NVIDIA Corporation (NVDA) : Free Stock Analysis Report
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Vistra Corp. (VST) : Free Stock Analysis Report
Palantir Technologies Inc. (PLTR) : Free Stock Analysis Report
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