The numbers show that the S&P 500 tends to perform better than the European stock market. Since 2000, the main index of the American stock market has appreciated by 295% compared to 37% for the Stoxx 600, the largest gap between the two indices in the entire last century. In 2024, which is shaping up to be a big year for stocks, the equation repeats itself. The S&P 500 achieved gains of 20.6% over the year, compared to 8.1% for the selective Old Continent. This difference in behavior is also the most significant in 2024.
Over the last 20 years, the Stoxx 600 has only recorded better annual results than the S&P 500 on seven occasions. This year, the Old Continent index only managed to place itself ahead of the S&P 500 on early 2024, while it was underway. During the first sessions of the year, it suffered a slight decline of 0.3%, compared to almost 2% lost by the Wall Street index. But the balance quickly turned out to be favorable to the United States, even if it was not as wide as today. The performance of the S&P 500 is up to 12.5 points higher than that of Europe.
The resilience of the American economy, the good commercial results of major stock market companies and the start of lowering rates by the American Federal Reserve (Fed) supported the progression of the American index throughout the year.
Even though we had to wait until September to see the Fed’s first rate cut (unlike the ECB which carried it out last June), the American body quickly caught up with the European central bank by making a cut. giant of 50 basis points in a single meeting. But today, the strength shown by the American economy could lead to a bifurcation between the ECB and the Fed, after knowing the good data on employment (254,000 new non-agricultural jobs were created last month, well above the 150,000 expected). ), this Thursday it’s inflation’s turn. The United States will release this Thursday the CPI figure for September which the market expects at 2.3%, continuing its downward trajectory from the previous month’s rate of 2.5%. Core inflation (that which excludes food and energy prices) should remain at 3.2%. And, with an inflation target of 2% ever closer and a resilient labor market, This good color that the North American economy continues to present dilutes expectations of rate cuts in the United States.
On this side of the pond, the context is different. In September, eurozone inflation fell below the ECB’s 2% target (to 1.8%, the lowest figure since June 2021), once again sparking fears of having pushed its monetary policy too far. In Europe, the need for the European body to continue lowering interest rates then becomes more obvious, as a means of reactivating consumption and avoiding a scenario that could even be deflationary.
To all this, we must add the strong growth that the activities of the world’s largest technology companies, present in the American market, continue to experience. Although there are fears that the artificial intelligence fever has not gone too far, the results of the leading companies continue to exceed the (increasingly high) estimates of experts.
This combination of factors has led the S&P 500 to set all-time highs over the course of this year, and in fact, this Wednesday it set even new ones. Less than 30% of its component companies register red numbers in practiceagainst nearly 40% of stocks which suffer from this on the European stock market. On the other hand, up to five companies in the American index doubled their stock market value during the year: Vistra, Nvidia, Palantir, Constellation Energy and GE Venova. The first of them even triples its capitalization in 2024.
And experts don’t believe the S&P 500’s gains have peaked yet. The analyst consensus collected by Bloomberg still sees an additional revaluation potential for the selective of 9% and they see the index exceed 6,000 points for the first time in its entire history, at 6,267 points precisely, the highest valuation in its entire history. The trajectory they estimate for the Stoxx 600, although higher, at 13%, would not help the European stock market achieve the performance of the American stock market.
Wall Street’s strong gains have only one counterpart: its earnings multiplier has risen to 23.8 times in 2024 and the S&P 500 is currently buying at a 23% premium to the last year’s average. decade. Compared to it, the PER (time the profit is reflected in the share price) of the Stoxx 600 remains attractive, at 14.6 times, and is acquired at a discount of 6% compared to the average of Last 10 years.
