The S&P 500 and FTSE 100 indexes are very different beasts, with the former dominated by Big Tech and the latter by old-economy banks and commodity giants.
Yet both generated inflation-beating wealth in 2025. The S&P 500 rose by 16.3%, while the FTSE 100 jumped around 21.5%, marking its best year since 2009.
However, the UK’s blue-chip index pays a higher dividend yield, pushing the total return (share price and dividends) towards 25%. Nice.
Given that the majority of my portfolio is made up of S&P 500 and FTSE 100 shares, I’m happy last year was strong across the board. But what about 2026? Should I focus on US or UK shares?
Valuations
Let’s start with an overview of valuation, as there’s only really one winner here. According to Vanguard, the FTSE 100’s trailing price-to-earnings (P/E) ratio was 17.7 at the turn of the year. In contrast, the S&P 500’s was 28.3.
Historically speaking, that’s incredibly high for the S&P 500. It tells us that many individual stocks are trading at very lofty valuations.
For example, Palantir and Tesla are insanely expensive, with forward P/E multiples of 197 and 167, respectively. These are not shares I’m looking to buy (at least not at these current valuations).
As mentioned, many FTSE 100 stocks offer far higher dividend yields than your average S&P 500 company (just 0.96%). Therefore, when searching for passive income stocks, I wouldn’t look further than the Footsie (or FTSE 250).
Given the S&P 500’s high starting value today (5 January), and the FTSE 100’s decent 3.2% dividend yield, I prefer the latter in 2026.
Looking for opportunities
That said, I’m not looking to buy either index fund this year. That’s because I believe I can potentially generate superior returns by picking individual shares. And opportunities can be found in either index, despite one being far more pricey than the other on average.
For example, some platform tech companies have seen their valuations battered and business models questioned due to AI disruption fears.
Rightmove (LSE:RMV) is one such example. This FTSE 100 stock has plummeted nearly 40% in just five months!
What’s going on? Well, despite 70% to 80% of all time spent searching for UK homes still taking place on the site/app, investors appear worried that AI could negatively impact the firm in two ways.
Firstly, the company has committed an extra £60m towards AI technology across 2026-2028. This threatens to lower profits. Second, there’s a theoretical risk that consumers may increasingly bypass its platform in future via AI agents.
While acknowledging these risks, I think the sell-off is overdone. Rightmove is investing to move beyond standard filters (eg, ‘3 beds’) towards AI-powered products and tools to enhance the search experience. My view is that this will likely further cement its dominance (consumer habits tend to change slowly).
Meanwhile, the property portal has previously seen off threats from Facebook Marketplace and Google, and I think it will with ChatGPT, too (assuming the AI chatbot even becomes one).
After its crash, Rightmove stock is trading at just 16.5 times forward earnings — a huge discount to its historical average.
At 516p, I think Rightmove is worth checking out. It’s just one of a number of potential buying opportunities I’m seeing across the FTSE 100 and S&P 500 today.
