Yahoo Finance

Our stock/bond asset-allocation model, which we call the Stock-Bond Barometer, is indicating that bonds are the asset class offering the most value at the current market juncture. Our model takes into account real-time levels, growth rates, and forecasts of short-term and long-term government and corporate fixed-income yields, inflation, stock prices, GDP, and corporate earnings, among other factors. The output is expressed in terms of standard deviations to the mean, or sigma. The mean reading from the model, going back to 1960, is a modest premium for stocks, of 0.09 sigma, with a standard deviation of 1.05. In other words, stocks normally sell for a slight premium valuation, which they have since inflation started kicking higher in 2022. The current valuation level now is a 0.45 sigma premium for stocks, reflecting in large part the move higher in long-term interest rates since the start of autumn and the conclusion of the election. Other valuation measures also show reasonable multiples for stocks. The current forward P/E ratio for the S&P 500 is approximately 21, within the normal range of 15-24. The current S&P 500 dividend yield of 1.2% is below the historical average of 2.9%, but is also 26% of the 10-year Treasury bond yield, compared to the long-run average of 39%. Further, the gap between the S&P 500 earnings yield and the benchmark 10-year government bond yield is about 305 basis points, compared to the historical average of 400. Lastly, the ratio of the S&P 500 price to an ounce of gold is now 2.2, within the historical range of 1-to-3. We expect the results from our stock-bond valuation model to tilt more toward stocks, as interest rates head lower and EPS growth picks up. Based in part on the output from our Stock-Bond Barometer, our recommended asset-allocation model for growth accounts is 70% growth assets and 30% fixed-income.

Some of the weakest areas of the stock market at the end of 2024 have done the best to start 2025. This is not unexpected, as weakness at the end of a quarter and at the end of a year usually leads to increased selling as tax losses are harvested. As well, institutions don't like to show many losers at the end of the quarter. As such, the big guns will try to catch up at the end of the year and will stick with momentum -- possibly shorting the weak relative-strength issues. This, to a degree, often will reverse in the new year, as the selling pressure disappears. On Thursday, the biggest winner of the 11 S&P 500 sectors was Energy (XLE), with a gain of 1.2%. The XLE peaked on November 22 at $96.46 and then fell until December 19 to $82.63, a decline of over 14% in just 18 trade days. XLE was down in 14 out of 18 days, creating a consistent bout of selling. Since its 12/19 closing low, the sector has bounced 5% in eight days. The XLE has seen strength across the board, with coal, exploration & production, pipelines, and oil equipment & services all doing well. Helping the sector has been the mini resurgence in natural gas, which, after testing $2/MMBTU in August, started crawling higher in September. Futures hit $4 at the end of the year and now sit at $3.65. Natural gas has completed a two-year base between $1.50 and $3.50, so additional gains are possible. Crude oil has come to life a bit as well, popping 2% and finishing at $73/barrel. The oil chart is a mess, drifting between $65 and the low $90s since late 2022. Most of the action has been capped off in the mid-$80s. (Mark Arbeter, CMT)

Royal Caribbean Group is the operating business name for Royal Caribbean Cruises Ltd. Royal Caribbean Group is the owner and operator of global cruise vacation brands: Royal Caribbean International, Celebrity Cruises, and Silversea Cruises. Royal Caribbean Group also has a portfolio of land-based vacation experiences through Perfect Day at CocoCay and Royal Beach Club collection. The company is also a 50% owner of a joint venture that operates TUI Cruises and Hapag-Lloyd Cruises. With a market capitalization of about $65.2 billion, RCL shares are generally classified as large-cap growth.

Some of the weakest areas of the stock market at the end of 2024 did the best to open 2025. This is not unexpected, as weakness at the end of a quarter and at the end of a year usually leads to additional selling as tax losses are harvested. In addition, institutions don't like to show too many losers at the end of the quarter. As such, the big guns will try to catch up at the end of the year will stick with momentum -- possibly shorting the weak relative-strength issues. This, to a degree, often will reverse in the new year, as the selling pressure disappears. On Thursday, the biggest winner of the 11 S&P 500 sectors was Energy (XLE), with a gain of 1.2%. The XLE peaked on November 22 at $96.46 and then fell until December 19 to $82.63, a decline of over 14% in just 18 trade days. XLE was down in 14 out of 18 days, creating a consistent bout of selling. Since its 12/19 closing low, the sector has bounced 5% in eight days. The XLE has seen strength across the board, with coal, exploration & production, pipelines, and oil equipment & services all doing well. Helping the sector has been the mini resurgence in natural gas, which after testing $2/MMBTU in August, started crawling higher in September. Futures hit $4 at the end of the year and currently sit at $3.65. Natural gas has completed a two-year base between $1.50 and $3.50, so additional gains are possible. Crude oil has come to life a bit as well, popping 2% and finishing at $73/barrel. The oil chart is a mess, drifting between $65 and the low $90s since late 2022. Most of the action has been capped off in the mid-$80s.