The second-longest series of weekly declines since May

While the reemergence of hotter-than-forecast inflation was the proximate cause of the latest plunge, another force is also at play in the second-longest series of weekly declines since May: high valuations. 

One lens that takes account of the increasingly anemic growth expected in S&P 500 earnings shows equities as richly priced as they’ve been in almost three decades of data.

The model, a tool of Fidelity Investments legend Peter Lynch a generation ago, is the PEG ratio, the market’s price-earnings multiple divided by its forecast growth rate. 


Since peaking earlier this month, the S&P 500 has erased more than half of a year-to-date gain that at one point reached almost 10%. The Dow Jones Industrial Average has already wiped out its 2023 advance after falling four weeks in a row.

Bloomberg 24 februari 2023 

https://www.bloomberg.com/news/articles/2023-02-24/bubble-math-is-too-much-for-s-p-500-with-down-market-weeks-piling-up

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Stock market books worst day of 2023 as rising yields contribute to ‘perfect storm’
MarketWatch 21 February 2023



Dow Industrials Drop Nearly 700 Points on Interest-Rate Concerns

WSJ 21 February 2023




The yield on the benchmark 10-year Treasury note has raced back toward 4% 
over the past month, a level it hit last year for the first time since 2008. 

It finished Tuesday at 3.953%, well above its 3.374% January low and higher than the 3.826% where it ended 2022. 

 
Rising Treasury yields erode investors’ willingness to pay up for stocks and corporate bonds, 
because buying Treasurys lets investors lock in attractive returns that are practically guaranteed. 

The broad-based S&P 500 index has lost ground for two straight weeks, shedding a portion of its year-to-date gains. 

Yields on corporate bonds have climbed, signaling higher borrowing costs for companies.

Matt Grossman WSJ 22 February 2023




This Bear Market (Probably) Isn’t Over Yet









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