Nine of the 11 major S&P sectors declined, led by a drop of 2% in consumer discretionary and 1.5% in financial stocks. The S&P 500's forward price-to-earnings ratio, a common metric for valuing stocks, is at 16.8 times earnings – far below the nearly 22 times forward P/E that stocks commanded at the start of the year. Excluding the energy sector, the growth rate is at -1.7%. So, a lot of the bad news is factored in right now … we are creating a market where there are potential upside surprises now."Īs of Friday, the S&P 500's estimated earnings growth for the third quarter is at 5%, according to Refinitiv data. "Valuations are a lot better than they were at the start of the year, earnings estimates have been lowered that makes it easier to beat.
I would expect more volatility as the market digests them, but at the same time we're cautiously optimistic," said Brian Klimke, director of investment research at Cetera Financial Group. "Going forward, the market is going to be hypersensitive to any sort of Fed comments and data coming up. The Fed lifted rates by an expected 75 basis points on Wednesday and signaled a longer trajectory for policy rates than markets had priced in, fuelling fears of further volatility in stock and bond trading in a year that has already seen bear markets in both asset classes. Sept 22 (Reuters) – Technology and financial stocks pulled Wall Street's main indexes lower for a third straight session on Thursday, as investors worried that the Federal Reserve's aggressive approach to rein in inflation could trigger a recession.
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