Something wild just happened to the S&P 500 and FTSE 100

After years, even decades, of dominating global markets, something strange just happened to the S&P 500 index. But what was it and will it last?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The past 12 months have been lucrative for global investors. The S&P 500 has leapt by 23.6% in a year, while the tech-laden Nasdaq Composite has soared by 33%.

Other major indices doing well include Japan’s TOPIX (up 36.7%), with the STOXX Europe 600 up 8.8%, beating the FTSE 100 (+1.9%).

The S&P rules everything around me

Bad news for British investors: our stock market has been disappointing for years. First, it’s shrinking, with the number of companies trading in London falling from 2,429 in January 2015 to 1,900 in July 2023.

Should you invest £1,000 in National Grid right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if National Grid made the list?

See the 6 stocks

Second, even homegrown private companies are choosing to list their shares in New York. In addition, several big UK-listed firms have decided to transfer their listings to the US.

Third, the FTSE 100 has underperformed the S&P 500 for ages. Since the global financial crisis (GFC) of 2007-09, US stocks have persistently and significantly outperformed their UK counterparts.

Here’s how each market index has performed over six timescales:

IndexFTSE 100S&P 500Difference
One week+1.1%-1.7%+2.8%
One month+2.9%-0.8%+3.7%
2024 YTD+3.4%+7.4%-4.0%
Six months+5.2%+18.4%-13.2%
One year+1.9%+23.6%-21.6%
Five years+7.6%+74.3%-66.6%

One thing I see is that the Footsie has posted single-digit returns over all periods from one week to five years. However, the above figures exclude cash dividends, which I’ll come back to.

Another thing is just how far the UK has fallen behind its US rival over longer periods. How relieved I am that much of my family portfolio has been invested in US stocks for many years.

Also, something unusual just happened. Over one week and one month, the FTSE 100 has beaten the S&P 500. This doesn’t happen that often, but is it this significant? Maybe not!

One sarcastic joke among financial pundits is: “Two data points make a trend.” In other words, we sometimes find patterns in random data that simply aren’t there.

Also, such a short-term outcome shouldn’t be spun into something significant. Even so, it’s good to see the Footsie making a minor comeback after countless years in the ‘value wilderness’.

One cheap share

My wife and I bought various cheap UK shares in recent years, largely from the FTSE 350 index. One I believe still offers classic value characteristics today is Barclays (LSE: BARC).

Since the GFC, Barclays has screwed up many times, paying a heap of fines and compensation along the way. But the Blue Eagle bank’s stock is so cheap that I’m willing to forgive these former foul-ups.

On Friday (12 April), the Barclays share price closed at 182.86p, valuing this British business at £27.6bn. That’s a fraction of its worth before the GFC nearly broke it. Over one year, it’s up 19.5% and it’s 13.6% ahead over five years.

Trading on a multiple of 6.8 times earnings, Barclays shares deliver an earnings yield of 14.6%. This means that its trailing dividend yield of 4.4% a year is covered over 3.3 times by its historic earnings. Nice.

That said, I expect bank earnings to fall in 2024, driven down by larger loan losses and bigger bad debts. Also, I’m expecting weaker credit growth and consumer demand this year. Even so, I’m happy to hold this undervalued share for the long term.

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Cliff D’Arcy has an economic interest in Barclays shares. The Motley Fool UK has recommended Barclays. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Asian man looking concerned while studying paperwork at his desk in an office
Investing For Beginners

£1k invested in the FTSE 100 on ‘Liberation Day’ is now worth…

Jon Smith talks about the volatility in the FTSE 100 in the weeks since the tariff announcements and flags up…

Read more »

Long-term vs short-term investing concept on a staircase
Investing Articles

Barclays’ share price is down 7% from March, so is now the right time for me to buy?

Barclays’ share price has dipped recently, which could mean a bargain to be had. I took a deep dive into…

Read more »

Investing Articles

Down 13% since March, does this rising FTSE 250 defence star look an unmissable buy for me?

The FTSE 250 is currently home to many of the big stock stars of tomorrow and I think this high-tech…

Read more »

Investing Articles

Should I buy Aston Martin shares for my ISA while they’re under 70p?

With Aston Martin's shares down hugely across multiple time frames, this writer is wondering if he should snap up some…

Read more »

Senior woman potting plant in garden at home
Investing Articles

Why I prefer investing with Warren Buffett to a FTSE 100 or S&P 500 tracker

When it comes to buying shares, ignoring advice from Warren Buffett is rarely a good idea. But our author thinks…

Read more »

Investing Articles

Forget gold! I prefer UK shares for trying to build long-term wealth

Stock market volatility has sent investors running to safe-haven assets. But for building wealth over time, Stephen Wright prefers UK…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

This S&P 500 stock looks crazily mispriced to me

After hitting a record high on 4 February, this S&P 500 stock crashed hard during the 'Trump slump'. But even…

Read more »

Investing Articles

Meet the FTSE 100 share I’m happy to own, even during the next recession

This FTSE 100 giant was founded in 1929, just before the Great Depression devastated the global economy. Today, it is…

Read more »