By Jack Denton

Given the S&P 500's strong year, investors may be forgiven for not looking beyond the U.S. -- but they should. While the S&P 500 rose some 18% so far this year, London's FTSE 100 is up nearly 21%, on track for its best year since 2009. "The outperformance is striking, especially given the U.K.'s limited exposure to technology stocks," wrote Frédérique Carrier and colleagues at RBC Wealth Management.

While artificial intelligence has fueled U.S. stocks, those trends are largely absent in the FTSE, which is stacked with financials, healthcare, energy, and defense. "The U.K. equity market has been carried by higher corporate profits and generous cash returns to shareholders, with a smattering of merger-and-acquisition activity on top," wrote Russ Mould, brokerage AJ Bell's investment director.

This bull market may well continue. "Valuations still look attractive to us despite the rally," noted RBC. AJ Bell's end-of-2026 FTSE price target is 10,750, up from 9,850 this past Tuesday, an estimated 9% gain. Bell points to average profit growth estimates of 14% from FTSE companies -- in line with Wall Street expectations for S&P 500 earnings.

Yes, Goldman Sachs estimates an 11% gain for the 2026 S&P 500 and Morgan Stanley sees a 14% gain, which beats AJ Bell's 9% for the FTSE. But there are still reasons to buy. "The FTSE 100's profit and dividend mix by sector and by stock means it is a good play on both global growth and inflation," Mould wrote.

Write to Jack Denton at jack.denton@barrons.com

Last Week

Markets

Over the pre-Christmas weekend, the U.S. seized one oil tanker leaving Venezuela and pursued another. Oil rose. Gold, silver, and copper set highs. The third quarter saw 4.3% growth, but consumer confidence fell again. Stocks began a Santa Claus rally powered by tech; the S&P 500 hit a high. On the short week, the Dow industrials rose 1.2%; the S&P 500, 1.4%; and the Nasdaq Composite, 1.2%.

Companies

The Delaware Supreme Court reinstated Elon Musk's Tesla pay package that the state's Chancery courts had blocked for lack of transparency. Waymo cabs in San Francisco stopped, blocking traffic, after a power outage knocked out traffic lights. Uber Technologies and Lyft are joining with Baidu to introduce robo-taxis to the U.K. Novo Nordisk won U.S. approval for its Wegovy weight-loss pill. The U.S. suspended five offshore wind-power projects, saying they posed a security threat to radar. President Trump called for defense companies to stress production, not share buybacks and executive comp.

Deals

Paramount Skydance said Oracle's Larry Ellison would guarantee $40.4 billion of its bid for Warner Bros. Discovery...A consortium led by Permira and Warburg Pincus is taking software company Clearwater Analytics private for $8.4 billion...Nelson Peltz's Trian Fund and venture firm General Catalyst will buy asset manager Janus Henderson in an all-cash $7.4 billion deal... Alphabet agreed to buy Intersect Power for $4.75 billion, including debt.

Next Week

Monday 12/29

An otherwise quiet week on Wall Street will feature a couple of key real estate data points. On Monday, the National Association of Realtors releases its pending home sales index. Contract signings are projected to have increased by 0.8% in November. On Tuesday, the S&P Dow Jones Indices' Cotality Case-Shiller index is expected to show that home prices rose at a 1.1% annual rate in October.

Tuesday 12/30

Minutes from the Federal Open Market Committee's last policy meeting of 2025 will be released. Officials opted to cut the federal-fund rate by a quarter of a percentage point at the December meeting; however, three committee members dissented. The group also published its projections for interest rates, showing further disagreement. While the median projection was for one cut in 2026, several members penciled in two cuts, and four members forecast none.

Wednesday 12/31

The final trading session of the year will wrap up on Wednesday at its usual time of 4 p.m. With the S&P 500 headed for a double-digit gain in 2025 and similar gains expected for 2026, Wall Street has a reason to pop the Champagne. Plus, U.S. stock and bond markets are closed on Thursday in observance of New Year's Day.

The Numbers

$1.7 T

Issuance of investment-grade corporate bonds this year, nearing the record of $1.8 trillion in 2020.

$136 B

The amount of consumer debt bought by private-credit companies in 2025, 14 times more than 2024.

50%

How much China increased its research-and-development spending from 2020 to 2024.

55

Number of congressional lawmakers not running for re-election next year, beating 2018's high of 54.

Write to Robert Teitelman at bob.teitelman@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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December 26, 2025 19:35 ET (00:35 GMT)

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