Home›ETFs & Funds›Fund Industry›Higher rates have pressured stock valuations despite m…

Higher rates have pressured stock valuations despite market resilience

FactSet data shows the S&P 500 forward 12-month P/E fell to 19.2x on September 25 from 20.4x at the end of the second quarter.

Reported · Written up by our desk · Fund Industry

For most of the past year, investors have grappled with how the stock market has continued to rise even as interest rates moved higher, according to ETF Trends.

The outlet points to evidence that higher required rates of return are pressuring valuations by increasing the discount rate applied to future cash flows, which lowers their present value.

ETF Trends says earnings have helped offset that effect as expectations for interest rates have shifted higher, with the forward price-to-earnings multiple on the S&P 500 moving lower.

FactSet data cited by ETF Trends shows the S&P 500’s forward 12-month P/E ratio was 19.2x on September 25, down from 20.4x at the end of the second quarter.

Latest closeS&P 500 7,765.36 ▼0.5%

More like this

Sources