Can S&P 500 stay above 1300?
By Matt Krantz, USA TODAY
The recent stock rally has rekindled investors' love-hate relationship with the number 1300 -- as in 1300 on the benchmark Standard & Poor's 500 index.
To some investors, 1300 is a beautiful number to see again, because it means the market is back to what has been its high level the past 13 years amid growing optimism about the economy. And getting to its current 1318, the S&P 500 is already up 4.8% this year.
But 1300 is also a glaring reminder of just how little stocks have done for so long. While the S&P 500 has been above 1300 prior to this year's rally as recently as last July, the level has been like a magnet that has pulled stocks back. The S&P first closed above 1300 on March 15, 1999, when stocks were still considered sure money-makers -- and it's struggled to stay above since.
The key, however, is that while the past 13 years have been rough for the overall market, many S&P 500 stocks are up. Consider that since March 15, 1999:
Most of the current S&P 500 members are up. Of the 407 stocks in the current S&P 500 that were trading in 1999, 296, or 73%, are higher, say data from S&P Capital IQ. Some, including Celgene, Apple and Cognizant Technology, are up more than 4,000%.
A majority of stocks in the S&P 500 in 1999 have gained. Due to the additions and deletions to the S&P 500 since 1999, it's natural to assume many of the dogs had been tossed out. Still, of the 299 members of the S&P 500 as of March 15, 1999, that are still trading, 174, or 58%, have risen in that time, S&P Capital IQ says.
Some stocks defied the odds and turned in some healthy returns. Of the 407 current S&P 500 stocks, 192 have at least doubled. These stocks doubled over the 13-year period, posting a 5.5% average annual gain, which is healthy given how low interest rates are.
A few key sectors carried the S&P 500. Despite the dismal performance of the market since March 15, 1999, seven of the 10 sectors are up during that time. Energy, materials and consumer staples are up the most, gaining 187%, 78% and 40%, respectively.
The fact the S&P 500 hasn't budged since 1999 masks that companies are much healthier. Earnings at S&P 500 companies have gained 87% since 1999 and cash levels are at a record, says Michael Farr of Farr Miller and Washington. "While the markets are not a lot higher, the underlying companies are much stronger," he says.
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