Investing in the US What is the current market like vs history
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S&P 500: Where are we now
From a technical perspective, the S&P 500 is rather bullish. It bounced from the 20-day moving average overnight, up 1.15% after a shallow 2.7% pullback from recent highs.
But from a valuation perspective, boy is it expensive. Just about every valuation metric for US stocks is in the 90th percentile.
Source: Goldman Sachs
At the same time, we know that markets have a tendency to lead the economy by 2-3 quarters. The second quarter of 2023 is expected to mark the trough for S&P 500 earnings, followed by a rebound from the third quarter onwards. By the fourth quarter of 2023, analysts expect earnings to be in record territory.
If the Fed is truly done with its hiking cycle and earnings are bottoming, then valuations might not be that expensive after all.
Source: Factset
