Can the S&P 500 rise another 20% this year, or will the FTSE fight back?

Harvey Jones has been dazzled by the stellar performance of the S&P 500, like everyone else. Yet today he’d rather buy FTSE 100 shares like Glencore. Why?

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The S&P 500 posted another cracking year in 2024. It grew more than 20% for the second year in a row, leaving global markets trailing in its wake.

Growth-hungry investors were treated to yet another leg of the tech-driven US rally, with AI stocks like Nvidia powering the index to new highs. I’m frustrated because I decided the chipmaker was probably overhyped at the start of 2024. It’s up more than 190% since I decided not to buy it. Ouch.

Created with Highcharts 11.4.3Nvidia PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

As a value investor, it’s not the first time I’ve regretted failing to jump on a red-hot momentum stock. With luck, I’ll learn.

Should you invest £1,000 in AstraZeneca 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 AstraZeneca made the list?

See the 6 stocks

The FTSE 100 is due a big recovery

But can the S&P 500 add another 20% this year? Or will the FTSE 100 finally stage its long-awaited comeback?

I should win either ways. I have ample exposure to US fortunes via low-cost trackers Vanguard S&P 500 ETF and the Legal & General Global Technology Index. Both have big stakes in Nvidia and the other tech mega-caps.

Yet I’m not convinced 2025 will deliver another bumper year for the US. A 20% gain on top of last year’s rally would push valuations into even more stretched territory. The S&P 500 already looks pricey, with the Shiller price-to-earnings (P/E) ratio at a staggering 37.26. By contrast, the FTSE 100’s P/E is a modest 15.76.

If earnings growth doesn’t meet expectations, US shares could slump. And with the Fed unlikely to slash rates aggressively, Wall Street might struggle to find its next catalyst.

The US remains irresistible, driven by relentless innovation, healthy profits and a resilient economy. Yet investing is cyclical, and now I think events could swing in favour of the FTSE 100.

The FTSE 100’s appeal

The FTSE 100 is a real underdog, held back by its exposure to old-world industries like energy, mining and financials. But its underperformance has been overdone. Its trailing yield of 3.5% smashes the S&P 500’s 1%. With dividends reinvested, that closes the gap over time.

Last year, my portfolio holding Glencore (LSE: GLEN) was a big flop. The mining giant’s share price dropped 23% as Chinese demand for commodities slumped. Yet commodities are particularly cyclical, and when the Glencore share price flies, it really flies. Despite last year’s disappointment, it’s still up 50% over five years.

Created with Highcharts 11.4.3Glencore Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Glencore shares look dirt cheap right now, with a trailing P/E of 10.2 times. The trailing yield may be a modest 2.82%, but the board has hinted at paying “top-up shareholder returns” in February. I’m crossing my fingers.

In the longer run, Glencore should benefit from the shift to electric vehicles and renewable energy, driving demand for copper, nickel, and cobalt. Its reliance on coal poses long-term ESG risks though.

Despite being listed in London, Glencore has relatively low exposure to the UK’s fortunes. Given today’s domestic troubles, that may be a plus.

Whatever happens this year, I wouldn’t be without my S&P 500 tracker. But I’m also excited by the FTSE 100. Glencore is just one brilliant opportunity for me. There are plenty more bargains out there.

Should you invest £1,000 in AstraZeneca 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 AstraZeneca made the list?

See the 6 stocks

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.

Harvey Jones has positions in Glencore Plc. The Motley Fool UK has recommended Nvidia. 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.

Like buying £1 for 51p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

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