Weekly movers: Top three stocks on the S&P 500 last week

The S&P 500 had another positive week last week, ticking up by about 0.4% to 4,329 as of the market close last Friday. It was the second straight week of gains for the S&P 500, which had gained about 0.5% the previous week. The benchmark is up by about 12.7% year to date as of Monday morning’s opening bell.

Overall, it was the first big week of third-quarter earnings reports, with some of the largest banks, JPMorgan Chase, Wells Fargo and Citigroup, posting strong numbers. However, the top stocks on the S&P 500 last week came mostly from the energy and defense sectors following the outbreak of war between Israel and Hamas. Here are the top three stocks on the S&P 500 from last week.

1. Northrop Grumman

Northrop Grumman (NYSE:NOC), one of the leading aerospace and defense companies, saw its stock price jump 15.8% last week. The stock was trading at around $490 per share as of Friday’s close, down roughly 10% year to date.

The primary catalyst for the defense stock was the war between Israel and Hamas, which broke out on Oct. 7 when Hamas launched a brutal surprise attack on Israel. The Biden administration has promised its “ironclad” support.

"So make no mistake: The United States will make sure that Israel has what it needs to defend itself," Defense Secretary Lloyd Austin said.

The U.S. also bolstered its presence in the region and vowed to send more military aid to Israel. As a leading manufacturer of defense systems, military aircraft, combat vehicles and advanced weapons, Northrop Grumman shares surged as demand for its weapons and systems soared.

2. Marathon Oil

The second-biggest mover last week was Marathon Oil (NYSE:MRO), which climbed 14.2% as of the market close on Friday. Marathon Oil is one of the largest oil and gas producers in the U.S. and is a descendent of John D. Rockefeller’s Standard Oil. The stock closed last week at $27.08 per share and is up by about 3% year to date.

The Israel-Hamas war also spurred Marathon higher last week, as the war sparked fears that Iran might cut back on its oil exports. While those fears have not materialized, the uncertainty sent oil prices rising, as Brent crude prices jumped from about $86 per barrel midweek to over $90 per barrel on Friday. While the spike in prices provided a short-term boost for oil stocks, a continued surge would not necessarily have the same result, particularly if it hurts the economy.

However, prices were already starting to fall back down, tumbling under $90 per barrel on Monday. There is a lot of uncertainty and speculation here, depending on how the conflict develops.

3. Huntington Ingalls Industries

The third major mover last week was Huntington Ingalls Industries (NYSE:HII), which was also impacted by the war. The leading military shipbuilder in the U.S. saw its share price rise by about 11% last week to roughly $225 per share. The stock is down about 3% year to date.

Like Northrop Grumman, the stock moved up last week due to the conflict in the Middle East, which sent most defense stocks higher. However, Huntington Ingalls also won a Navy contract last Wednesday to build nine small unmanned undersea vehicles (SUUV) for the U.S. Navy’s Lionfish System program. The $347 million contract has the potential to grow to include up to 200 vehicles over the next five years.

Given that these stocks were all largely pushed up by the same catalyst, investors should proceed with caution. A deeper dive into each, including an analysis of their third-quarter earnings results, would be warranted.