Bull Market Pauses as S&P 500 Earnings Fall, P/E Expands: Chart

What's Driving the Markets?

Valuations in U.S. equities have risen to near a six-year high as the Standard & Poor’s 500 Index is hanging in there in spite of three quarters of profit declines. While analysts forecast income to drop 10 percent in the current earnings season for the worst performance since 2009, the good news is, for the first time in eight months, the pace at which analysts are cutting their estimates is slowing. With valuations elevated, an improvement in earnings momentum may help break the nearly yearlong drought during which the S&P 500 hasn’t made a fresh high.

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