The Stock Market Needs Earnings Growth To Rise In 2020

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With stock market valuations close to all-time highs and margins under pressure, increases in stock prices in 2020 will have to come from revenue and earnings growth and not valuations rising

. From FactSet’s chart you can see that the only other time in the past 10 years the Index’s forward PE multiple has been higher was in late 2017/early 2018 before the markets fell about 12%, cutting the metric.by cutting interest rates three times this year and increasing its balance sheet.

The following chart shows the increases in quarterly earnings needed for the S&P 500 to generate $178.24 for the year. They are backend loaded, which makes them susceptible to being lowered as the year progresses. With the Index already trading at an 18.1x PE multiple, it creates a low margin of error environment for stock prices.

 

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Unless the fed keeps injecting cash into the markets. inflation . Js :D

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