Since the bear-market low in October 2022, the S&P 500 Index has returned an extraordinary 67%
The more stocks went up, the more investors around the world believed that they would continue to go up.
Unfortunately, that self-perpetuating inertia suddenly seems to be carrying us in the wrong direction.
Price-earnings valuations were already on the high side.
At about 21 times, the S&P 500’s blended forward P/E ratio is still well above its old “normal” of around 17 times in the 2015-2019 period.
Consumers could be one of the most important wildcards. The combination of volatile markets and higher prices from tariffs may cause US shoppers to retrench.
For the past couple of years, soaring stock-market returns have made Americans feel richer and spend a bit more than they otherwise might have, which ultimately supported corporate earnings.
But inertia works on the way down as well.
Once a bull market is broken, it’s not particularly easy to put it back together again.
Jonathan Levin Bloomberg 10 mars 2025 at 11:30 CET
https://www.bloomberg.com/opinion/articles/2025-03-10/is-the-bull-market-in-detox-or-melting-down
Markets Finally Woke Up to Tariff Reality. Is This a Buying Opportunity?
The case for thinking the selloff is overdone is that markets have broadly dropped back to where they were at the election
Prices haven’t moved that much.
U.S. stocks weren’t cheap on Nov. 5, and aren’t cheap now.
Stocks are still above 21 times estimated earnings for the next 12 months (their dotcom-era high 25 years ago was 25 times).
It remains true that much of this high valuation is due to the heavy weight in the S&P of the Magnificent Seven: Amazon, Alphabet, Apple, Meta, Microsoft, Nvidia and Tesla.
But if they plunge back to lower valuations, they are so big they drag down the index as a whole.
James Mackintosh WSJ March 9, 2025 5:30 am ET
Tillbaka till Rolfs länktips 10 mars 2025
https://englundmacro.blogspot.com/2025/03/rolfs-lanktips-10-mars-2025.html
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