Equity market chart book
|The S&P 500 has continued to push to new all-time highs. Over the past year, drawdowns on the index have been shallow and short-lived–rarely moving below the 50-day moving average.
Even given the strong market, the P/E ratio has come down. That's because earnings are growing faster than the market is rising. S&P 500 earnings are on track (according to Factset’s consensus projection) to be 42% higher this year compared to last year (2021 vs. 2020). It illustrates the point that you can get multiple compression in an up market, particularly coming out of recessions. Currently, the market is trading at about 20x 2022's projected earnings...
...As always, the outlook requires constant reassessment. And everyone needs to put probability and reward-to-risk assessments in the context of their strategy, process, and time horizon.
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