Argus

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Jun 04, 2026

Market Outlook

Bullish

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Short

Summary

We have different ways of looking at market valuations, and most are signaling that stocks are reasonably valued, but not a bargain. Our Stock Bond Barometer asset-allocation model is indicating that the two major portfolio asset classes are near parity for valuation. The model goes back to 1960 and takes into account real-time price levels, historical growth rates, and forward-looking forecasts of government and corporate fixed-income yields, inflation, stock prices, GDP, and corporate earnings, among other factors. The output is in standard deviations to the mean, or sigma. The mean reading from the model is a modest premium for stocks, of 0.18 sigma, with a standard deviation of 1.07. So stocks normally sell for a slight premium compared to bonds. The current valuation level is a 0.71 sigma premium for stocks, within the normal range. 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. On price/book, stocks are priced at the high end of the historical range of 5.5-1.8, given that tech stocks, with low capital bases, are the biggest component of the market. The S&P 500 dividend yield of 1.08% is below the historical average of 2.9%, but the relative reading to the 10-year Treasury bond yield is 24% compared to the long-run average of 39% and the all-time low of 18% during 1999. On price/sales, the current ratio of 3.3 is abov

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