U.S. Stock Market – Earnings and Valuation The valuation is high relative to history, but not near historical extremes. The U.S. stock market should remain under pressure until Q3 earnings season. Picture source: Fidelity Investments
Buybacks Are the Source of the Rally in the Stock Market since 2009 But as trade tensions and economic slowdown worry U.S. firms, stock buybacks declined last quarter. Picture source: Deutsche Bank Global Research
Valuation – U.S. Stock Market Capitalization-to-GDP The U.S. stock market capitalization-to-GDP is a general gauge of market valuation, but it’s not very useful for short-term market timing. Picture source: Bloomberg
Every Day of the U.S. Stock Market for the Last 10 Years Interesting chart showing that moves over 1% have been quite rare over the last 10 years. Picture souce: Chartr Ltd
How Does A First Rate Cut Affect the Stock Market? Since 1970, the first rate cut has been bullish for the S&P 500 for the next 12 months, with recession and no recession. Picture source: Fidelity Management and Research
Stock Market Around First Rate Cut: Recession vs. No Recession The chart shows that the Dow Jones Industrial Average reacts positively to Fed first rate cuts. Picture source: Ned Davis Research
Stock Market Capitalization as a Percentage of Nominal GDP This ratio is useful in determining whether the U.S. stock market is undervalued or overvalued relative to its historical average. The current reading is pretty high at 149.15%. You may also like the “Stock Market Valuation” and “S&P 500 Index – Earnings & Valuation.” Picture source: Bianco Research
Is The U.S. Stock Market Overvalued? S&P 500 Valuation: the chart shows that the U.S. stock market is not cheap. Based on the forward P/E ratio, the S&P 500 is not extremely overvalued either. You may also like our “Stock Market Valuation.” Picture source: Bianco Research
The Stock Market’s Central Trend The chart shows that the S&P 500 is only 10% above its long-term trend since 1871. Picture source: Fidelity Investments
U.S. Stock Market Annualized Returns since 1872 You may notice as the timeframes get longer, the frequency of losses rapidly decreases. During 1872 to 2018, there were no 20-year rolling periods with stock market losses. Picture source: Visual Capitalism
