Vanguard Thinks The Party Is Almost Over For U.S. Stocks

Blockhead12-23 21:00

If you owned U.S. stocks and ETFs — especially of giant tech companies in the S&P 500 — you hit the jackpot in 2024. But some think the chips need to fall as gravity sets in — perhaps as soon as 2025....

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But some think the chips need to fall as gravity sets in — perhaps as soon as 2025....</p>\n\n<a href=\"https://www.investors.com/etfs-and-funds/etfs/sp500-vanguard-thinks-the-party-is-almost-over-for-u-s-stocks/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"NVDU","symbol_name":"Direxion Daily NVDA Bull 2X Shares","start_time":0,"source_url":"https://www.investors.com/etfs-and-funds/etfs/sp500-vanguard-thinks-the-party-is-almost-over-for-u-s-stocks/","article_id":"2493768145","we_media_id":null,"thumbnails":["https://www.investors.com/wp-content/uploads/2019/08/Stock-FallingMan-07-adobe-150x150.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2493768145","pubTimestamp":1734958841,"columns":[],"sourceInfo":{"source_id":"investor_business_daily_highlight","name":"Investor’s Business Daily"},"weMediaInfo":null,"summary":"If you owned U.S. stocks and ETFs — you hit the jackpot in 2024. 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Morgan EM High Yield Bond ETF","NVDS":"Tradr 1.5X Short NVDA Daily ETF","NVIW.SI":"NVDA 3xLongSG261006"},"translate_title":"先锋集团认为美国股市的派对即将结束","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"MSFT":1,"SPMO":1,"PFFA":1,"SPY":1,"SPY.AU":1,"NVDA":1,"MAGS":1,"IVV.AU":1,"IBKR":1,"IAUM":1,"UTES":1,"VOOG":1,"EWW":1,"EMHY":1,"VOO":1,"AGG":1,"ARGT":1,"BDRY":1,"FDN":0.9,"US3Y.BOND":0.8,"US30Y.BOND":0.8,"US2Y.BOND":0.8,"US12M.BOND":0.8,"US10Y.BOND":0.8,"US5Y.BOND":0.8,"US6M.BOND":0.8,"US7Y.BOND":0.8,"UPRO":0.6,"SSO":0.6,"NVDY":0.6,"SPXU":0.6,"NVDS":0.6,"2NVD.UK":0.6,"3NVD.UK":0.6,"ESmain":0.6,"IVV":0.6,"NVD":0.6,"NVD2.UK":0.6,"NVD3.UK":0.6,"NVDD":0.6,"SNVD.UK":0.6,"NVDU":0.6,"NVDX":0.6,".SPX":0.6,"NVIW.SI":0.6,"OEF":0.6,"OEX":0.6,"SDS":0.6,"SH":0.6},"content_text":"If you owned U.S. stocks and ETFs — especially of giant tech companies in the S&P 500 — you hit the jackpot in 2024. But some think the chips need to fall as gravity sets in — perhaps as soon as 2025.\n\n\n\n↑\nX\n\n\n\n\nBeating The Market: How To Find Outperforming Stocks\n\n\nSee All Videos\n\n\n\n\nNOW PLAYING\nBeating The Market: How To Find Outperforming Stocks\n\n\n\n\nETF giant Vanguard — one of the largest owners of U.S. stocks — is cautioning that future returns might disappoint investors who think a 25% annual return is normal. Years of excess returns in the S&P 500 makes stocks wildly overvalued. Vanguard forecasts just a 2.8% to 4.8% annual return over the next 10 years, starting now. That's a far cry from the S&P 500's roughly 10% annualized long-term return.\nAnd get this! Vanguard thinks U.S. bonds will beat stocks with an annualized return of 4.3% to 5.3% over the next 10 years. Even international stocks are seen topping the S&P 500 in the next 10 years, Vanguard says.\n\"Over the short term, our analysis suggests that if economic growth and earnings hold up, U.S. equities could sustain elevated valuations,\" Vanguard said in its annual outlook. \"However, as the horizon extends, growth and earnings impacts diminish, with valuations eventually dominating returns as a fundamental gravity.'\"\n\nHow Did The S&P 500 Get Here?\nInvestors don't need to look hard to figure out why the S&P 500 is so pricey. It's on fire. Just look at the biggest winners in the index.\nThe eight most-valuable S&P 500 stocks drove roughly half of the index's entire gain this year. And that run is very apparent in the ETF market.\nThe Invesco S&P 500 Momentum ETF (SPMO), which is loaded up with big technology winners like Nvidia (NVDA) and Microsoft (MSFT), returned 44.5% this year. That makes the ETF the top actively traded U.S. diversified fund this year, says Morningstar Direct. And its return easily tops the S&P 500 roughly 25% gain.\nThis made big gains easy to find. All three of the most popular ETFs gained big this year. The $628.1 billion in assets SPDR S&P 500 ETF Trust (SPY) returned 24.5%. The $591 billion Vanguard S&P 500 (VOO) and $546 billion iShares Core S&P 500 (IVV) returned equivalent amounts.\n\nLarge Growth Keeps Pushing S&P 500 Higher\nAnd make no mistake, large growth stocks are the driver. Vanguard S&P 500 Growth ETF (VOOG) is up roughly 36%. Strong earnings growth from U.S. companies, especially big tech, drove much of the gains.\n\"Here is the catch: Replicating the past decade's stellar returns is not an easy feat — it would require unprecedented earnings growth or historically high valuations,\" Vanguard said.\nBullish analysts, though, think a repeat of robust profit is possible. In 2025, S&P 500 earnings are seen rising 15% and technology earnings 23%, says John Butters of FactSet. That's up from 2024 where S&P 500 profit is projected to rise 9.5% and tech profit 17.7%.\nLarge U.S. companies' strong profit and robust financial firepower justifies their high valuations, says Simeon Hyman, strategist at ProShares. He says the S&P 500's P-E of 25 is elevated from where it would normally be: 18 to 20. But that's due to S&P 500 companies cutting their debt loads — which makes them safer.\n\"That is a substantial reduction in financial risk,\" Hyman said.\nInternational Wasteland\nAnd as U.S. stock ETFs flourished in 2024, international funds languished. Big time.\nMore than 98% of actively traded international ETFs lagged the S&P 500 this year. Some of the losses are brutal. Breakwave Dry Bulk Shipping ETF (BDRY) tanked nearly 48% this year, making it the worst foreign ETF this year. And iShares MSCI Mexico ETF (EWW) dropped nearly 31%.\nTrade, specifically with Mexico, is in the crosshairs of incoming U.S. President Donald Trump. And the strong dollar continues to dog foreign stocks.\n\"The dollar, meanwhile, is up to its highest level in over two years as favorable interest rate differentials contend with domestic outperformance and Trump's proposed tariffs, all of which support the greenback,\" said Jose Torres, senior economist at Interactive Brokers (IBKR).\nThe big exception globally is Argentina. The country's pro-growth administration is luring investment. Global X MSCI Argentina ETF (ARGT) is up 61% this year.\nCommodity ETFs Good As Gold\nSome assets, though, benefit from a strong dollar. Partly thanks to a strong dollar, gold ETFs are dominating the commodities category.\nEight of the top 10 actively traded commodity ETFs are gold related. And despite not generating any income or earnings, gold ETFs are giving the S&P 500 a run for its money.\niShares Gold Trust Micro (IAUM), with $1.4 billion in assets, is up nearly 26% this year. The gold ETF's five-year annualized return is stellar, too, coming in at 11.8%. Political unrest is also good for gold as it's seen as a safe haven.\n\"This surge (in gold prices) was driven by central bank buying, Western investment flows, and gold's role as a hedge against market volatility,\" said the World Gold Council's Gold Outlook 2025 report.\n\nAI Better Than Gold\nBut while gold ETFs glitter, AI is the shiny new thing luring investors' attention.\nAI-related funds are dominating actively traded sector ETFs this year. Thanks to a huge gain by Nvidia, Roundhill Magnificent Seven ETF (MAGS) is up more than 66% this year.\nAnd in an interesting twist, utility stocks morphed into huge stock gainers, too. That's because power-hungry AI models are firing up demand for electricity. Virtus Reaves Utilities ETF (UTES) is up nearly 43% this year. Not bad for a \"sleepy\" sector.\nIt's almost like investors are willing to take a shot on any ETF tied to growth. And that's leaving behind some famous safe haven investments like bonds.\nBond Investors Are Bummed\nReturns from diversified bond ETFs disappointed in 2024.\nThe $119.5 billion-in-assets iShares Core US Aggregate Bond ETF (AGG) returned just 1.4% this year. That means bonds' annualized five-year return is -0.3%.\nBond investors did better by looking for more exotic types of income. Virtus InfraCap US Preferred Stock (PFFA) returned 16.8% on the year. The ETF owns shares of preferred stock that pay more assured, but not guaranteed, dividends.\nAnd while investors largely skipped international stocks, they went for junk bonds issued by companies in emerging markets. Taking on the added risk paid off with additional returns. iShares J.P. Morgan EM High Yield Bond (EMHY) returned 11.6%.\nWhat The Future Holds For S&P 500\nVanguard sees three very different possibilities for markets in 2025.\nIf productivity booms like it did in the mid-1990s, the large-cap rally could continue and \"drive the market higher,\" Vanguard said. That's the most bullish path.\nAnother possibility is that overlooked value and small-cap stocks rally, thanks to lower interest rates. But that leaves the third and scariest scenario of a 1999-style S&P 500 implosion that \"could expose the vulnerability of current stock market valuations and increase the odds of a market drawdown,\" Vanguard said.\nVolatility is a normal part of investing. But others say it's too soon to worry about this bull run ending. Since 1949, the average S&P 500 bull market rages 1,661 days and generates average returns of over 158%, says Bespoke Investment Group.\nCompare those numbers to the current bull market, and you'll see it is still relatively young and has produced returns that are less than half of the average, says Kieran Kirwan, strategist at ProShares, pointing out the bull started Oct. 12, 2022.\n\"The upshot is that further gains may be supported by robust earnings growth over the next two years, potentially allowing large caps to grow into today's extended multiples,\" he said.\nVanguard's View Of The Future\nSees disappointing future returns from U.S. stocks\n\n\n\nAsset\n10-year annualized return projection\n\n\n\n\nGlobal bonds, ex-U.S.\n4.3% - 5.3%\n\n\nU.S. bonds\n4.3% - 5.3%\n\n\nGlobal stocks (ex-U.S., developed)\n7.3% - 9.3%\n\n\nGlobal stocks (emerging)\n5.2% - 7.2%\n\n\nU.S. stocks\n2.8% - 4.8%\n\n\n\nSources: Vanguard, S&P Global Market Intelligence\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nFollow Matt Krantz on X (Twitter) @mattkrantz\nYOU MAY ALSO LIKE:\nNvidia Owns 4 Stocks — One Is Doing Even Better Than It Is\nVanguard Is Paying 4.7% Risk-Free — But Only If You Do This\n\nLearn How To Time The Market With IBD's ETF Market Strategy\n\nFind Today's Best Growth Stocks To Watch With IBD 50\nJoin IBD Live Each Morning For Stock Tips Before The Open","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2493768145"}