The Pandemic And Stocks
(May 15, 2020, 6 p.m. EST) The Standard & Poor's stock index closed Friday 2.3% lower for the week, and is 24.6% off the epidemic low of March 23. Amid the worst economic crisis in modern history, here's what it means to retirement investors based on a historical perspective and facts about earnings, which ultimately is what drives stock prices.
Historically, shares in America's 500 largest publicly traded companies are priced at a multiple of 16 to 19 times their expected profits. That valuation range of stocks in 'normal' times is shown in the two solid red lines. In recent weeks, the S&P 500 has been priced near the high end of the normal valuation range. The actual price of the S&P 500 is the black line.
The dashed red lines apply the historical valuation range, of 16 to 19, to the latest consensus earnings forecast from Wall Street's analysts surveyed by Thomson Reuters IBES. .
- Confirming Recovery Is Under Way
- Despite Grim Headlines, Stocks Rose Sharply -- Why?
- The Paradigm Shift In Valuing Stocks
- Retail Sales And Housing Starts In June Reveal Recovery's Shape
- Keeping Perspective In An Unreal Environment
- Economic Fundamentals Recovering As Stocks Surged For the Week
- Stocks Swing Wildly As Economic Recovery Begins
- Dog Days Of Summer In The Economy
- V-Shaped But Full Recovery Is Long Off
- Covid-19 Causes A Good Surprise
- The Epidemic Sets The Economy Back About Two Years
- Is This A New Bull Market?
- The Pandemic And Stocks
- Despite Disastrous Jobs Report, Stocks Surged 1.6% Friday
- Amid The Crisis In The Economy, Two Good Anomalies
- Financial Economics With The Epidemic's End In Sight
- The Beginning Of The End?
- An 11.4% One-Week Gain In Stocks
- What Investors Should Expect And A Business Owner Alert
- Is the Coronavirus Bear Market Over?
- What's An Investor To Think Now?
- Will Covid-19 Crisis Be Short-Lived?
- Despite Covid-19, Signals Of Economic Health Continue
- Covid-19: Facts And Perspective For Investors