If S&P 500 Valuations Had You Worried in August, They're Back
- Index P/E ratio approaches five-year high, reached in July
- Fed rate increases, stronger dollar darken 2016 outlook
Traders on the floor of the New York Stock Exchange on Oct. 29, 2015.
Photographer: Richard Drew/AP PhotoThis article is for subscribers only.
Renewed willingness among U.S. stock investors to pay more for every dollar of earnings may soon be put to the test, according to Russ Koesterich, BlackRock Inc.’s global chief investment strategist.
As the chart below shows, the price-earnings ratio for the Standard & Poor’s 500 Index is close to a five-year high. The S&P 500 was valued at 18.8 times earnings as of yesterday, according to data compiled by Bloomberg. The ratio peaked at 18.9 times on July 20 and dropped to 16.6 times on Aug. 25, when the index set this year’s low.