Valuation signals are flashing deep red for U.S. stocks, while non-U.S. markets appear far more attractive. It’s hard to imagine valuation indicators painting a more bearish picture for U.S. equities than they do today. By nearly every measure, U.S. stocks are priced at extreme levels. Meanwhile, non-U.S. stocks have already delivered more than twice the return of the S&P 500 this year, and there’s a compelling case that their strong performance will continue into 2026. For investors who want to stay invested in equities but are increasingly uneasy about lofty U.S. valuations, global markets offer a more appealing alternative. Many U.S. investors may not realize how strong non-U.S. performance has been in 2025, as headlines have been dominated by the “Magnificent Seven” and the AI-driven rally. Yet through Dec. 26, the S&P 500 is up 16.3%, while non-U.S. stocks have surged 33.1%, based on the MSCI All-Country World ex-U.S. index. A weaker U.S. dollar helped fuel some of that outperformance, boosting dollar-based returns for overseas assets. Even so, non-U.S. equities remain significantly cheaper than U.S. stocks after their rally. That valuation gap suggests non-U.S. markets could continue to outperform in 2026, even if the dollar stops falling. The contrast becomes even clearer when looking at cyclically adjusted CAPE ratios, which compare current market levels to the past 10 years of inflation-adjusted earnings. This valuation metric, popularized by economist Robert Shiller, highlights how stretched U.S. equities have become. According to Barclays Indices, the U.S. CAPE ratio is higher than those of roughly two dozen other global markets. On average, those countries trade at just over half the valuation of the U.S. Overvaluation warnings The CAPE ratio is just one of 10 valuation indicators tracked monthly for their ability to forecast long-term, inflation-adjusted returns. Today, all 10 point to the same conclusion: U.S. stocks are extremely overvalued. The latest readings place the average valuation percentile at 98%, meaning the market is more expensive than at nearly any other point in U.S. history. It’s difficult to envision a more cautionary signal. That leaves investors with a critical question: Will U.S. stocks once again defy gravity in 2026, or will far cheaper non-U.S. markets prove to be the safer — and stronger — bet?

Samantha LaDuc: Rising Treasury Yields Could Be a Warning Sign for Stocks in 2026 Samantha LaDuc, founder of LaDucTrading, was among the market strategists who correctly anticipated this year’s S&P 500 trajectory — a sharp selloff followed by a strong rebound. A veteran trader since 2008, LaDuc warned clients in early December 2024 that equities were heading for a “bloodbath,” forecasting a roughly 20% decline in the first half of 2025. Her view was based on tariffs not being priced in and a weakening U.S. dollar. The equity pullback arrived on Liberation Day, while the dollar has yet to recover from its early-year slump. In a recent MarketWatch interview, LaDuc said she turned bullish around April 9, projecting an upside target of “hellbent on 6,666” for the S&P 500. By June, she outlined two potential paths: if the index could reach and hold above 6,100, she saw 7,000 as the next milestone. Sustained strength above 7,000, she said, could ultimately pave the way toward 8,200. The S&P 500 has already moved close to that level, recently topping out at 6,945.77. LaDuc has built a reputation for timely market calls. In 2022, she warned of an impending “tech wreck,” a year that proved difficult for the Nasdaq. In early 2024, she urged investors to stay invested in equities — advice that aligned with a record-setting year for the S&P 500. Looking ahead to 2026, LaDuc expects a challenging but upward-trending market. “My core theme is a recession into all-time highs,” she said. “Stocks can continue to rise even as unemployment increases.” She added that concerns about stagflation are already surfacing within the Federal Open Market Committee. For the S&P 500 to reach 8,200, LaDuc believes two forces must work together. The first is continued enthusiasm around artificial intelligence. With several major AI-related IPOs potentially arriving in 2026 — including OpenAI, SpaceX and Anthropic — she argues it’s difficult to envision a sustained market breakdown. The second factor is a weaker U.S. dollar. “A falling dollar is extremely supportive for inflationary assets and equities,” she said. Combined with AI-driven excitement, LaDuc believes this could fuel a melt-up toward the 8,200 level. She estimates current AI revenues at around $60 billion and says meaningful productivity gains and margin expansion — even if driven by layoffs — would be key to justifying higher equity valuations. That upside, however, could come alongside labor market stress and persistently high inflation. With Wall Street projecting a roughly 16% gain for the S&P 500 by the end of 2026, LaDuc cautions that stocks are “priced for perfection.” In her view, elevated valuations leave little room for macroeconomic shocks. Her biggest concern for equities is rising Treasury yields. LaDuc sees the 10-year yield as a major risk, arguing that higher unemployment and inflation would push yields higher as investors demand greater term premiums. “Rising yields tend to pull capital away from growth assets and into safety,” she said. The key level she’s watching is 4.6%. “If yields reach that level and hold, the move higher likely continues,” she warned. Overall, LaDuc expects 2026 to be a “hold-your-nose” market — one where stocks grind higher but experience pullbacks due to stretched valuations. She also notes that midterm election years are typically supportive for equities, as policymakers prefer to avoid weak markets ahead of elections. Beyond stocks, LaDuc remains bullish on commodities, a stance she’s held since spring 2024. She describes the trend as “phenomenal,” particularly for miners, though she excludes oil. In April 2024, she made the contrarian call that crude would fall from around $80 a barrel into the $60–$40 range, easing energy costs for miners. Her long-term optimism on precious metals is driven by falling energy costs and a weaker U.S. dollar. “The big-picture trend in precious metals isn’t going away,” LaDuc said. “The only thing that would change it is the U.S. government balancing its budget — and the odds of that are slim.”

Investors had plenty to smile about this Christmas as stocks, gold and silver all surged further into record territory. Markets delivered a holiday boost on Wednesday, with U.S. equities and precious metals extending their rallies. The S&P 500 posted a fresh record close during the shortened Christmas Eve session — its first such close on that day since 2013, according to Dow Jones Market Data. The benchmark ended at 6,932.05 and also set a new intraday high, its first on Christmas Eve since 2014, FactSet data showed. Gold and silver joined the rally, each touching new intraday records earlier in the session. The most active gold futures climbed to $4,555.10 an ounce, while silver futures jumped as high as $72.75, Dow Jones Market Data showed. Both metals later pulled back from those highs by the time the stock market closed at 1 p.m. Eastern. The gains cap a resilient year for markets. After weathering a period of volatility — including the tariff-driven selloff in April — stocks have powered higher in 2025, with the S&P 500 on pace for a third straight year of double-digit gains. As 2026 approaches, investors are increasingly focused on signs the U.S. economy may be regaining momentum, even as a soft labor market continues to fuel concerns about consumer health. “It’s been a good year,” said Thomas Martin, senior portfolio manager at Globalt Investments. “There was a lot of uncertainty coming into it. After Liberation Day, it looked like things could turn ugly. But the economy and the consumer held up better than expected, and S&P 500 earnings growth also surprised to the upside. That’s why we’re here.” Wednesday’s advance was broad-based. Ten of the 11 S&P 500 sectors finished higher, with energy the lone laggard, according to FactSet. After climbing steadily through the spring and summer, stocks hit turbulence in November when pressure on the artificial-intelligence trade caused the Nasdaq Composite to snap a seven-month winning streak. More recently, however, delayed economic data released after the government shutdown has reinforced expectations that the economy will land in a “Goldilocks” zone in 2026. “The economic data over the past few weeks has been mixed, allowing investors to remain confident the Fed will continue easing into 2026,” said Gina Martin Adams, chief market strategist at HB Wealth. “It’s not weak enough to spark recession fears and not strong enough to force the Fed to tighten or halt the easing cycle.” She added that oil prices holding below $60 a barrel have also helped support stocks by easing pressure on consumer spending. “All of these factors have pushed equities to new highs in recent weeks,” Adams said. The Nasdaq, Dow Jones Industrial Average and Russell 2000 all finished higher on Wednesday as well, though each remains below recent record levels. Meanwhile, market volatility continued to retreat. The Cboe Volatility Index, Wall Street’s so-called fear gauge, slipped below 14 for the first time since Dec. 13, 2024, signaling a calm market mood heading into the holiday.