In the third quarter of the year, September proved to be a challenging month for Wall Street as it historically has been the worst month for stocks. A steep rise in Treasury yields and oil prices, along with concerns about the Federal Reserve keeping interest rates high, weighed heavily on the market. As a result, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq all ended the quarter in negative territory. However, there were some standout performers in our 35-stock portfolio, including Eli Lilly, Caterpillar, Pioneer Natural Resources, and Alphabet, whose solid earnings reports and strong fundamentals boosted their stock prices during the quarter.
Eli Lilly emerged as the top performer in the third quarter, with its stock rising 14.53%. The company’s stock saw a significant boost on August 8 when it reported stellar earnings driven by its diabetes drug Mounjaro. Eli Lilly’s stock reached an all-time high on September 12 but has since declined by about 9%. Caterpillar also had a strong quarter, with its stock climbing 10.95%. The industrial giant’s stock reached a record high after it reported strong earnings for the second quarter. Pioneer Natural Resources, an oil and gas exploration company, saw its stock rise 10.8% as oil prices rallied. Finally, Alphabet, the parent company of Google, saw its stock increase by 9.3% in the quarter, thanks to strong second-quarter results and a growing realization that it is not as far behind Microsoft in the artificial intelligence race as previously thought.
On the other hand, Foot Locker, Estee Lauder, and Ford were among the laggards in the third quarter. Foot Locker’s stock fell 36% as its turnaround strategy failed to materialize, causing concerns among investors. Estee Lauder’s stock declined steadily throughout the quarter, dropping 25.44%, primarily due to challenges in its key Asia travel retail segment. Ford’s stock fell 17.9% amid worries about a possible United Auto Workers strike, although it managed to outperform the overall market during the strike. Despite the challenges faced by these laggards, we remain patient and hopeful for improvements in their performance in the future.
Overall, the winners in the third quarter demonstrated strong fundamentals and delivered solid earnings reports that satisfied investors. Despite the market’s overall difficulties, these companies showed resilience and outperformed their peers.