Jonathan Clements | February 28, 2018
IF THERE’S ONE FINANCIAL WEBSITE I visit more than any other, it’s markets.WSJ.com. Before the stock market opens, I’ll look to see whether the S&P 500 futures indicate shares are headed higher or lower. During the trading day, I’ll check occasionally to see where things stand with stocks—and, if there’s been a big move, I’ll scour news sites to see what might be driving it.
But markets.WSJ.com doesn’t just offer a snapshot of the financial markets. It also allows visitors to gauge valuations. Want to play armchair market strategist, especially at this time of market turmoil? Many key numbers can be found on the website’s home page, but some require burrowing into the site. Here’s what I look at:
- The S&P 500’s dividend yield and price-earnings ratio. Today, the S&P 500 companies are collectively yielding 1.9%, versus a 50-year average of 2.9%, and they’re trading at more than 25 times reported earnings, compared with the 19.2 average for the past 50 years. The site also includes the P/E based on predicted operating earnings. I don’t pay much attention to that figure, because it’s skewed lower by overly optimistic forecasts from Wall Street analysts.
- How 10-year inflation-indexed Treasurys compare to 10-year Treasury notes. You need to dig into the site to find the yield on inflation bonds. Meanwhile, the 10-year Treasury note yield is on the home page, with the yield for other maturities found elsewhere. Right now, 10-year inflation-indexed Treasurys are yielding almost 0.8 percentage point more than inflation, while 10-year Treasurys are paying 2.9%. The difference—somewhat above 2.1 percentage points—represents investors’ collective expectation for annual inflation over the next 10 years.
- What high-yield junk bonds are yielding relative to Treasurys. The site has details on a variety of high-yield indexes, but I usually look at the Merrill Lynch high-yield index included under the “U.S. Corporate Debt” category. Right now, it shows junk bonds yielding less than 3.5 percentage points more than Treasurys—not much of a cushion, given the risk of default.
- Where the dollar is trading relative to the euro. Today, it costs $1.22 to buy a euro, versus $1.06 a year ago. When the dollar weakens, I know it’s good for the value of my foreign-stock funds—but not so good for my next trip abroad.
- The interest rate on 30-year fixed-rate mortgages. You can find this by scrolling down the home page. Lately, mortgage rates have been climbing along with other interest rates, which is hurting housing affordability.
- Where gold stands. I have a modest position in a gold stock mutual fund. But mostly, I look because, if gold is up, it may mean that investors are either skittish about the dollar—or skittish about the world in general.
To supplement what I learn from markets.WSJ.com, I turn to a host of other sites. Yale University economics professor Robert Shiller offers a great spreadsheet with the latest cyclically adjusted price-earnings ratio, plus a bounty of historical earnings, dividend and other financial information. From Shiller’s online data page, click on the link labelled “U.S. Stock Markets 1871-Present and CAPE Ratio.”
Meanwhile, I turn to StarCapital.de for information on international stock market valuations, NAREIT for data on real estate investment trusts, Barron’s for money market fund yields and Bankrate.com for yields on certificates of deposit. To see how different parts of the global market are faring year-to-date, I’ll visit Vanguard.com and check results for its various index funds. And when the days are dull, there’s always Coindesk.com, which offers the chance to gasp over the latest price for bitcoin.
Follow Jonathan on Twitter and on Facebook.