Here's What the S&P 500 Did the Last 2 Times Its Earnings Grew 25%-Plus for 3 Straight Quarters
The last two streaks were followed by a 17% rise and a 15% fall.
Over the past two instances in which S&P 500 companies experienced a 25% or greater growth in earnings for three consecutive quarters, the index's performance has shown distinct patterns. The first such streak occurred from the fourth quarter of 2009 through the third quarter of 2010, coinciding with the recovery from the financial crisis.
Another streak took place throughout 2021, during a period when the pandemic was affecting economic activity. In the latest streak, which ended in October 2021, the S&P 500 achieved a record close, trading at 7,743.98, slightly below its previous high from October 6. Despite the strong earnings growth, the index has experienced fluctuations, falling approximately 15% from October 2021 to January 2022.
The current valuation, as indicated by the forward price-to-earnings ratio, is lower compared to the previous streak, suggesting that the market may have adjusted to the higher earnings growth. While the current earnings growth streak is a positive indicator, it is essential to consider other factors such as interest rates and valuation when assessing the overall investment outlook.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
