U.S. Stocks May Surge to Catch Up With Profits: Chart of the Day
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The Standard & Poor’s 500 Index’s failure to keep pace with record corporate earnings may signal the benchmark equity gauge will surge if it returns to its historical relationship with profits.
The CHART OF THE DAY shows that four years ago, when the S&P 500 lagged behind trailing 12-month corporate profits, the measure went on to reach an all-time high of 1,565.15. The chart also shows that while combined earnings by companies in the index have exceeded the previous peak reached in 2007, the measure itself is 19 percent below that October 2007 record.