Wary investors say those gains leave stocks more vulnerable to an economic downturn, which may have been brought closer by tumult in the banking sector following this month’s collapse of Silicon Valley Bank. Many point to equity valuations, which remain elevated by historical standards, while arguing that corporate earnings may have a long way to fall in the event of a recession.
This month’s banking sector turbulence again revved up concerns, as some analysts argued the stress on lenders could pressure the economy just as the Fed’s monetary policy tightening is starting to bite. S&P 500 earnings for the first quarter are estimated to have fallen 5% from the prior year, followed by an expected 3.9% drop in the second quarter, Refinitiv data shows. During recessions, however, earnings tumble at a 24% annual rate on average, according to Ned Davis Research.Valuations for stocks overall are also high historically, with the S&P 500 trading at about 18 times forward earnings estimates compared to its long-term average P/E of 15.
Investors are looking to next week's monthly payrolls report for a read on the strength of a labor market that has shown resiliency over the past year.
Wow the Demonrats really have fucked up our entire lives. You have no idea how bad this will get
Factor that before taxes GavinNewsom
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