In November, the S&P 500 was relatively unchanged, advancing just 0.13 per cent.
Last month, eight sectors delivered positive returns while three sectors reported negative price returns. Sectors with the highest price returns were health care, communication services, materials and consumer staples with gains of 9.1 per cent, 6.3 per cent, 4 per cent and 3.9 per cent, respectively. The technology sector shifted from being the top performer to the leading laggard. In October, the technology sector was the sector leader with a 6.2-per-cent price return. However, in Nov., the technology sector was the worst performing sector with a negative price return of 4.4 per cent.
The top 10 performers in the S&P 500 Index in November were:
- Albemarle (ALB-N), up 32 per cent
- Eli Lilly (LLY-N), up 25 per cent
- Solventum (SOLV-N), up 23 per cent
- Merck & Co. (MRK-N), up 22 per cent
- Kenvue (KVUE-N), up 21 per cent
- Expeditors International of Washington (EXPD-N), up 21 per cent
- Regeneron Pharmaceuticals (REGN-Q), up 20 per cent
- IDEXX Laboratories (IDXX-Q), up 20 per cent
- Akamai Technologies (AKAM-Q), up 19 per cent
- Biogen (BIIB-Q), up 18 per cent
For the first 11 months of the year, the S&P 500 has a price return of 16.45 per cent.
The third quarter earnings season was solid. According to a report from LSEG published on Nov. 28, of the 483 companies in the S&P 500 that have reported their quarterly results, 83 per cent delivered better-than-expected results. Earnings growth for the third quarter is forecast to come in at 14.7 per cent year-over-year driven by the technology sector with 30.1 per cent year-over-year earnings growth forecast, followed by financials with 25 per cent year-over-year earnings growth anticipated. Once again, the energy sector has the lowest earnings outlook with a year-over-year decline of 1.5 per cent expected.
Solid earnings growth is forecast for the fourth quarter of 2005 and 2026. Year-over-year earnings growth for the fourth quarter is expected to come in at 8.2 per cent, up from last month’s 8.1 per cent forecast. Year-over-year earnings growth is anticipated to come in at 13 per cent in 2025, up from 12.4 per cent forecast last month, and climb to 14.6 per cent in 2026, up from 13.8 per cent forecast last month. In 2026, earnings growth from the technology sector is expected to accelerate with year-over-year growth of 26.6 per cent, up from 24.6 per cent forecast in 2025.
Historically, December has been a mixed month for the S&P 500 Index. The index posted gains in six of the past 10 years, and in 13 of the past 20 years. To illustrate, the S&P 500 Index declined 2.5 per cent in Dec. 2024, rallied 4.4 per cent in 2023, fell 5.9 per cent in 2022, advanced 4.4 per cent in 2021, and increased 3.7 per cent in 2020.
According to the Nov. 28 LSEG report, the forward four-quarter price-to-earnings multiple for the S&P 500 stood at 23 times, up slightly from 22.9 times as of Nov. 5.
Now, here’s a look at analysts’ target prices, recommendations, forecast returns and yields for all securities in the S&P 500 grouped by sector and ranked according to their expected price returns (excluding dividend and distribution income). The posted target price for each security is an average of all available target prices from analysts. A target price typically reflects an expected share or unit price 12 months from now based on an analyst’s financial modelling, such as a discounted cash flow or sum-of-the-parts model. Data is as of Nov. 28.
It’s important to note that high target prices, which imply stellar returns that seem unbelievable may be just that - unrealistic. At times, when a stock price falls analysts may maintain their bullish expectations, inflating the forecast return. In addition, an outlier (extreme target price) can skew the average target price, to the upside or downside, particularly when the number of analysts covering a stock is low. Don’t let a huge projected gain lure you into a position – it is critical to look at the company and industry fundamentals.
Click here to download an Excel version of the report.
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