Is a new bull market here for the S&P 500? It depends on whom you ask.
Yes, the index has jumped more than 20% above its previous bear market low. That's enough to qualify as a new bull market for many investors. Others, however, require that the S&P also hit a new all-time high. It hasn't achieved that goal yet.
Regardless of which camp you're in, you no doubt hope that a long-lived, roaring bull market for the S&P 500 is truly on the way. If you're expecting one, here are the 10 stocks you'll want to own.
Heavyweight champions
I won't try to build up the suspense. Below are the top 10 stocks to own if you believe a roaring S&P 500 bull market is on the way:
| Stock | S&P 500 Weight |
|---|---|
| Apple (AAPL -0.20%) | 7.46 |
| Microsoft (MSFT 0.17%) | 6.80 |
| Alphabet (GOOG 0.11%) (GOOGL 0.08%) | 3.67 |
| Amazon (AMZN 0.92%) | 3.06 |
| Nvidia (NVDA 3.14%) | 2.92 |
| Tesla (TSLA -1.71%) | 1.92 |
| Meta Platforms (META 2.35%) | 1.71 |
| Berkshire Hathaway (BRK.A 0.33%) (BRK.B 0.63%) | 1.66 |
| UnitedHealth Group (UNH 0.93%) | 1.22 |
| Johnson & Johnson (JNJ 0.14%) | 1.17 |
Data source: Slickcharts. Weights as of June 22, 2023. Table created by author.
Technically, I've cheated a little bit. Both Alphabet and Berkshire Hathaway have two stocks reflecting different class shares. While Berkshire's super-expensive class A shares aren't included in the S&P 500, Alphabet's class A and class C shares are in the index. Forgive me if I still refer to the "10 stocks" on the list.
Why are these the stocks you should own if a roaring S&P bull market is on the way? Just look at the weights. These companies combined make up nearly 32% of the overall index.
Could the S&P 500 enjoy a spectacular and sustained move higher without most of these stocks performing well? It's possible. However, I don't think it's probable. The likelihood is that if there's a strong bull market ahead, Apple, Microsoft, Alphabet, and most of the others on the list will deliver solid gains.
Good news
The good news for anyone cheering for a booming bull market is that one could very well be in its early stages. And it's being led by many of the stocks on our list.
Nvidia's share price has nearly tripled so far in 2023. The demand for its graphics processing units (GPUs) in artificial intelligence (AI) systems has skyrocketed.
This intense interest in AI has also benefited several of the other stocks listed. Meta, for example, has seen its shares soar over 130% year to date. Tesla stock has more than doubled. Apple, Amazon, and Microsoft are all up by at least 40%. Alphabet isn't too far behind.
Berkshire Hathaway isn't an AI stock. However, its shares are still up close to 10%. The conglomerate's huge stake in Apple is a big reason for the gain.
Bad news
Now for the bad news. Many stocks aren't participating in the S&P 500's current rally. Based on some metrics, market breadth with the latest upward trend is the lowest ever. This suggests that the chances of a strong new bull market aren't all that great.
An AI boom could become an AI bubble that bursts. For a bull market to really get its legs, a broader cross section of stocks should gain momentum.
There are also macroeconomic worries. Inflation remains stubbornly high. Federal Reserve Chairman Jerome Powell told a congressional committee last week that more interest rate hikes are likely. Many economists still predict a mild recession is on the way.
Best news
I don't want to end with bad news. Instead, let me wrap up with the best news: All of the stocks on our list could be great picks over the long run regardless of whether or not there's an S&P 500 bull market in the short term.
The reality is that no one knows for sure if a strong, sustained bull market is about to begin. But we can be reasonably confident that several underlying trends should enable the 10 aforementioned companies to grow.
AI should provide a tremendous long-term catalyst for the tech stocks on the list. Aging populations should boost the fortunes of the two healthcare companies. The resilience of the U.S. economy should work in Berkshire's favor.
Bull market or no bull market, Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla, Meta, Berkshire, UnitedHealth Group, and Johnson & Johnson could be winners for patient investors.
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Keith Speights has positions in Alphabet, Amazon.com, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon.com, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends Johnson & Johnson and UnitedHealth Group. The Motley Fool has a disclosure policy.
