US Stocks Gain as Weak Jobs Data Fuels Fed Cut Bets

By Philip van Doorn

Stocks in developed economies outside the U.S. tend to trade at lower valuations. Some of the companies are expected to expand their businesses rapidly over the next two years.

The S&P 500 trades well above its 10-year average forward price/earnings valuation. The MSCI EAFE ETF trades at a much lower P/E than the S&P 500 and is only slightly above its 10-year average valuation.

The headlines of record highs for U.S. stock indexes continue to flow, but what investors need to worry about is not just high prices in a bull market, but high valuations relative to earnings.

A commonly used metric for stock valuations is the forward price-to-earnings ratio. That is a stock's price divided by the consensus estimate for the next 12 months' earnings per share among analysts working for brokerage firms or research firms.

On this basis, the S&P 500 SPX appears to be expensively priced relative to the index's long-term P/E valuation. But the story is different for stocks of large companies outside the U.S.

Here's a comparison of current forward P/E ratios for the SPDR S&P 500 ETF Trust SPY and the iShares MSCI EAFE ETF EFA with their 10-year average valuations.

   ETF                       Ticker  Forward P/E to 10-year average  Forward P/E  10-year average P/E 
   SPDR S&P 500 ETF Trust  SPY                                 120%        22.19                18.49 
   iShares MSCI EAFE ETF   EFA                                 105%        15.01                14.29 
                                                                                      Source: FactSet 

There are many funds tracking the S&P 500, but SPY is the oldest exchange-traded fund to track the large-cap U.S. benchmark. It has $655 billion in assets under management. The fund's annual expenses come to 0.0945% of total assets, which means the annual fees for a $10,000 investment come to $9.45. The fund tracks the S&P 500 by holding all of its stocks, weighted by market capitalization. This means it is highly concentrated, with the top five holdings - Nvidia Corp. (NVDA), Microsoft Corp. (MSFT), Apple Inc. (AAPL), two common share classes of Alphabet Inc. (GOOGL) (GOOG), and Amazon.com Inc. (AMZN) - making up 29.1% of the portfolio.

The MSCI EAFE Index XX:990300 includes 693 large-cap and midcap stocks in 21 developed markets excluding the U.S. and Canada, but including Hong Kong. The index is designed to capture "approximately 85% of the free float-adjusted market capitalization" within each of the 21 economies. The iShares MSCI EAFE ETF EFA tracks the index by holding all of its stocks, with an annual expense ratio of 0.32%. And even though this index is also weighted by market cap, it is far less concentrated than the S&P 500. The top five holdings of EFA - ASML Holding NV (ASML), SAP SE (SAP), AstraZeneca PLC (AZN), Novartis AG (CH:NOVN) and Nestle SA (CH:NESN) - make up only 6.8% of the portfolio.

Screening the MSCI EAFE Index

Starting with the 693 companies in the MSCI EAFE Index, we cut the list to 615 stocks covered by at least nine analysts. Then we cut further to limit the group to 188 rated buy or the equivalent among at least two-thirds of the analysts.

For a further cut to give the screen a value-tilt, we excluded stocks with forward P/E ratios higher than 20. This brought the list down to 122 companies.

We then sorted the remaining list by expected compound annual growth rates for revenue from 2025 through 2027. For a uniform set of calendar-year estimates, FactSet adjusted the data for any companies whose fiscal reporting periods don't match the calendar.

Here are the 20 companies passing the screen for which analysts expect the highest revenue CAGR from 2025 through 2027:

   Company                                   Ticker    Two-year estimated sales CAGR through 2027  Forward P/ECountry 
   Aegon Ltd.                              NL:AGN                                           39.6%          7.7Netherlands 
   Elia Group SA/NV                        BE:ELI                                           19.5%         16.6Belgium 
   Erste Group Bank AG                     AT:EBS                                           17.4%          9.6Austria 
   InPost S.A.                             NL:INPST                                         17.3%         12.6Luxembourg 
   Prosus N.V. Class N                     NL:PRX                                           16.4%         15.2Netherlands 
   Genmab A/S                              DK:GMAB                                          14.8%         14.9Denmark 
   Yangzijiang Shipbuilding Holdings Ltd.  SG:BS6                                           14.5%          7.9China 
   Daiichi Sankyo Co.                      JP:4568                                          12.6%         19.6Japan 
   Santos Ltd.                             AU:STO                                           12.4%         13.1Australia 
   Swedish Orphan Biovitrum AB             SE:SOBI                                          12.4%         16.2Sweden 
   CVC Capital Partners PLC                NL:CVC                                           10.7%         16.6U.K. 
   Zalando SE                              DE:ZAL1                                          10.5%         15.8Germany 
   Infineon Technologies AG                DE:IFXA                                          10.0%         17.4Germany 
   Renesas Electronics Corp.               JP:6723                                           9.3%         11.5Japan 
   National Grid PLC                       UK:NG                                             9.2%         12.6U,K, 
   Mowi ASA                                NO:MOWI                                           9.0%         13.5Norway 
   AIA Group Ltd.                          HK:1299                                           8.7%         13.7Hong Kong 
   Adidas AG                               DE:ADS1                                           8.7%         18.0Germany 
   Techtronic Industries Co.               HK:669                                            8.6%         16.4China 
   Barratt Redrow PLC                      UK:BTRW                                           8.4%         11.2U.K. 
                                                                                                            Source: FactSet 

And here is a summary of analysts' opinions about these stocks. Prices and targets are in local currencies where the stocks are listed:

   Company                                   Ticker    Sept. 8 price  Consensus price target  Implied 12-month upside potential  Share buy ratings 
   Aegon Ltd.                              NL:AGN               6.47                    6.80                                 5%                67% 
   Elia Group SA/NV                        BE:ELI              94.50                  111.69                                18%                77% 
   Erste Group Bank AG                     AT:EBS              83.10                   85.93                                 3%                86% 
   InPost S.A.                             NL:INPST            11.81                   18.88                                60%               100% 
   Prosus N.V. Class N                     NL:PRX              53.05                   58.53                                10%                71% 
   Genmab A/S                              DK:GMAB          1,739.00                2,002.04                                15%                70% 
   Yangzijiang Shipbuilding Holdings Ltd.  SG:BS6               3.17                    3.36                                 6%                90% 
   Daiichi Sankyo Co.                      JP:4568          3,704.00                5,552.67                                50%               100% 
   Santos Ltd.                             AU:STO               7.71                    8.32                                 8%                67% 
   Swedish Orphan Biovitrum AB             SE:SOBI            276.00                  339.08                                23%                80% 
   CVC Capital Partners PLC                NL:CVC              15.19                   19.52                                28%                71% 
   Zalando SE                              DE:ZAL1             25.93                   36.36                                40%                75% 
   Infineon Technologies AG                DE:IFXA             32.08                   42.77                                33%                93% 
   Renesas Electronics Corp.               JP:6723          1,702.00                2,491.67                                46%                79% 
   National Grid PLC                       UK:NG               10.32                   12.01                                16%                75% 
   Mowi ASA                                NO:MOWI            207.40                  221.07                                 7%                73% 
   AIA Group Ltd.                          HK:1299             73.00                   89.44                                23%               100% 
   Adidas AG                               DE:ADS1            182.05                  243.64                                34%                77% 
   Techtronic Industries Co.               HK:669              96.60                  115.89                                20%                94% 
   Barratt Redrow PLC                      UK:BTRW              3.69                    5.15                                40%                95% 
                                                                                                                                   Source: FactSet 

You should do your own research to form your own opinion before making any investment. One way to do that is to click on the tickers for more information about any company, ETF or index in this article.

Read: Tomi Kilgore's detailed guide to the information available on the MarketWatch quote page

UnitedHealth Group Incorporated (UNH) is currently at $346.78, up $26.53 or 8.28%

• Would be highest close since May 12, 2025, when it closed at $378.75
• On pace for largest percent increase since Aug. 15, 2025, when it rose 11.98%
• Currently up four consecutive days; up 12.63% over this period
• Longest winning streak since Aug. 13, 2025, when it rose for four straight trading days
• Best four day stretch since the four days ending Aug. 18, 2025, when it rose 17.94%
• Up 11.91% month-to-date
• Down 31.45% year-to-date
• Down 44.54% from its all-time closing high of $625.25 on Nov. 11, 2024
• Down 42.11% from 52 weeks ago (Sept. 10, 2024), when it closed at $599.03
• Down 44.54% from its 52-week closing high of $625.25 on Nov. 11, 2024
• Up 45.85% from its 52-week closing low of $237.77 on Aug. 1, 2025
• Traded as high as $347.63; highest intraday level since May 12, 2025, when it hit $387.21
• Up 8.55% at today's intraday high; largest intraday percent increase since Aug. 15, 2025, when it rose as much as 14.3%
• Best performer in the DJIA today
• Best performer in the S&P 500 today
• Fourth most active stock in the S&P 500 today
• Contributed 163.08 points to the DJIA so far today

All data as of 1:13:28 PM ET

Source: Dow Jones Market Data, FactSet

The DAX is down 88.68 points or 0.37% today to 23718.45

• Down two of the past three trading days
• Off 3.39% from its record close of 24549.56 hit Wednesday, July 9, 2025
• Off 3.39% from its 52-week high of 24549.56 hit Wednesday, July 9, 2025
• Up 29.85% from its 52-week low of 18265.92 hit Tuesday, Sept. 10, 2024
• Rose 29.85% from 52 weeks ago
• Off 3.39% from its 2025 closing high of 24549.56 hit Wednesday, July 9, 2025
• Up 20.58% from its 2025 closing low of 19670.88 hit Wednesday, April 9, 2025
• Month-to-date it is down 0.77%
• Year-to-date it is up 3809.31 points or 19.13%

Source: Dow Jones Market Data, FactSet

The FTSE 100 Index is up 21.09 points or 0.23% today to 9242.53

• Up for two consecutive trading days
• Up 34.32 points or 0.37% over the last two trading days
• Largest two day point and percentage gain since Thursday, Sept. 4, 2025
• Up four of the past five trading days
• Off 0.85% from its record close of 9321.40 hit Friday, Aug. 22, 2025
• Up 45.82% since the pre-Brexit vote level of 6338.10 hit Thursday, June 23, 2016
• Today's closing value is the sixth highest this year
• Highest closing value since Wednesday, Aug. 27, 2025
• Off 0.85% from its 52-week high of 9321.40 hit Friday, Aug. 22, 2025
• Up 20.35% from its 52-week low of 7679.48 hit Wednesday, April 9, 2025
• Rose 12.63% from 52 weeks ago
• Off 0.85% from its 2025 closing high of 9321.40 hit Friday, Aug. 22, 2025
• Up 20.35% from its 2025 closing low of 7679.48 hit Wednesday, April 9, 2025
• Month-to-date it is up 0.60%
• Year-to-date it is up 1069.51 points or 13.09%

Source: Dow Jones Market Data, FactSet

The FTSE MIB rose 0.7% to close at 42,008 on Tuesday, outperforming other European benchmarks with support from heavyweight banks as markets assessed the outlook of lending activity with a more consolidated banking sector.

Banca Monte dei Paschi di Siena surged 6.3% after it secured 62.3% of Mediobanca's capital, cementing a €16 billion takeover that was long-resisted by the latter to form the third largest lender in the country.

In the meantime, BPER Banca advanced 2.4% and Banco BPM jumped 2.1% as markets continued to assess the reported interest in a portion of the bank by Credit Agricole.

On the monetary policy front, Italian BTPs were mostly unchanged ahead of the ECB's likely hold this week, further supporting lenders as most of the pressure on European bonds were focused in France due to their political turmoil.

European stocks closed slightly higher on Tuesday, extending the advance from the prior session as markets navigated political turmoil and fresh M&A news while assessing the outlook on global rates.

The Eurozone's STOXX 50 added 0.2% to 5,372 and the pan-European STOXX 600 inched higher to 553.

The French parliament voted on a vote of no confidence on Prime Minister Bayrou as parties could not agree to budget cuts, forcing President Macro to appoint the country’s fifth PM in less than two years.

In the meantime, bond yields traded in narrow fashion despite the turmoil, supporting equities ahead of the ECB's likely rate hold this week.

In turn, Anglo American surged 8.7% after the announcement that it will acquire Teck Resources for $20.2 billion.

In the meantime, Italian banks were higher following news that Banca MPS secured control of Mediobanca for €16 billion, lifting its stake in the lender to 62.3%.