In January, the S&P 500 rallied 1.4 per cent.
Last month, eight sectors delivered positive returns while three sectors reported negative price returns. Sectors with the highest price returns were energy, materials, consumer staples, industrials and communication services with healthy gains of 14.4 per cent, 8.6 per cent, 7.5 per cent, 6.6 per cent and 5.7 per cent, respectively.
Sectors that were in the red last month include financials, technology and health care with losses of 2.6 per cent, 1.7 per cent and 0.2 per cent, respectively.
The top 10 performers in the S&P 500 Index in January were:
- Sandisk Corp. (SNDK-Q), up 143 per cent
- Moderna Inc. (MRNA-Q), up 49 per cent
- Seagate Technology Holdings PLC (STX-Q), up 48 per cent
- Micron Technology Inc. (MU-Q), up 45 per cent
- Western Digital Corp. (WDC-Q), up 45 per cent
- Lam Research Corp. (LRCX-Q), up 36 per cent
- Lockheed Martin Corp. (LMT-N), up 31 per cent
- Bunge Global AG (BG-N), up 28 per cent
- SLB NV (SLB-N), up 26 per cent
- Intel Corp. (INTC-Q), up 26 per cent
The fourth-quarter earnings season is off to a solid start. According to a report from LSEG published on Jan. 30, of the 166 companies in the S&P 500 that have reported their quarterly results, 77 per cent delivered better-than-expected results, which is higher than the long-term average of 67 per cent.
Year-over-year earnings growth for the fourth quarter is forecast to come in at 10.9 per cent, down from 14.9 per cent reported in the third quarter. The technology sector has the highest growth rate with earnings expected to grow 30 per cent year-over-year.
Solid earnings growth is expected to accelerate. Year-over-year earnings growth is anticipated to come in at 13.7 per cent in 2025 and rise to 15.1 per cent in 2026. Year-over-year earnings growth is forecast to expand 12.5 per cent in the first quarter of 2026, 15.2 per cent in the second quarter of 2026, 15.4 per cent in the third quarter, 16.9 per cent in the fourth quarter of 2026 and 19.1 per cent in the first quarter of 2027.
According to LSEG, the forward four-quarter price-to-earnings multiple for the S&P 500 stood at 22.3 times, down slightly from 23 times as of Nov. 28.
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 Jan. 30.
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.