The S&P 500 has long been an accepted benchmark of US industrial health status, and has been a consistent winner, delivering annual gains to investors for decades.
The Vanguard FTSE Europe ETF (VGK) is downgraded from Hold to Sell due to escalating European energy risks. VGK's apparent value—P/E of 17.2 versus 31 for the S&P 500, suggests it is a well-priced investment opportunity, but energy fundamentals and other factors suggest more potential downside risk. Europe faces a looming energy crisis, with gas inventories 23% below the five-year average, and a 2027 ban on Russian imports may compound supply challenges.
Vanguard FTSE Europe ETF is upgraded from Sell to Hold due to attractive fundamentals and a lower P/E ratio versus the S&P 500. VGK's recent outperformance is driven by a strong euro and solid earnings growth, but faces risks from European fiscal and energy uncertainties. European natural gas inventories are well below average, raising concerns of a potential energy crisis if Russian gas does not return this winter.
Vanguard Europe ETF maintains a "Buy" rating, supported by strong momentum and attractive valuation despite a rising U.S. dollar. VGK trades at a significant discount to the S&P 500, with a low P/E ratio of 14.8x and a solid 2.7% dividend yield. The ETF offers broad sector diversification, leans toward value and large caps, and provides a strong alternative to US-only equity exposure.
I am upgrading my rating on VGK as Europe enters a phase of both monetary and fiscal expansion, which could support equity markets. At the center of my focus: ECB rate cuts and Germany's easing of fiscal rules inject much-needed liquidity. Since inflation is under control, this kind of stimulus has historically been viewed positively by the market, as it fuels forward EPS expectations and reduces valuation multiples.
For investors seeking momentum, Vanguard FTSE Europe ETF VGK is probably on the radar. The fund just hit a 52-week high and is up 19.95% from its 52-week low price of $62.02/share.
Entering trading on Tuesday, the S&P 500 was down more than 12% since the start of the year. What started out looking like it might be a good year in 2025 with some early gains may end up being a nightmare for investors.
With President Trump imposing new tariffs on the EU and the likelihood of EU countermeasures increasing, transatlantic trade tensions are escalating. Look at ETFs with a focus on the single currency bloc, as the U.S. appears to be taking the bigger hit in the trade war.
After years of lagging behind U.S. equities, international stocks are staging a remarkable comeback in 2025.
The S&P 500 (^GSPC 0.16%) has fallen 2% year to date as tariffs imposed by the Trump administration have led to economic uncertainty and even recession fears in the U.S. However, apart from duties on steel and aluminum imports, Europe has so far been excluded from the burgeoning trade war.
When it comes to the markets, U.S. exceptionalism reigned supreme for more than two years, as the broader benchmark S&P 500 outpaced most markets around the world. Recent weakening economic data, concerns about rising inflation, and President Donald Trump's efforts to initiate multiple trade wars have stalled this market run (at least for now).
The Trump administration has unnerved investors with its departure from traditional trade policy. The average tax on U.S. imports fell to 2.5% under the previous administration, but the tariffs Trump has imposed or plans to impose would raise that figure to 8.4%, according to the nonpartisan Tax Foundation.