Markets

S&P 500 increases mid-October rebound from bear markets low By Stocksak


© Stocksak. FILE PHOTO A specialist trader works on New York Stock Exchange (NYSE), New York City, U.S.A, October 17, 2022. REUTERS/Brendan McDermid

By Noel Randewich

(Stocksak). – Tuesday’s surge of over 1% adds to two weeks worth of strong gains. Investors speculate third-quarter earnings reports could help pull market out of its downturn.

Wall Street rose with Apple (NASDAQ;), Tesla (NASDAQ.) and other tech-related stocks. Microsoft (NASDAQ.) and Alphabet (+1%) both increased about 1% after the bell. This was because investors believed that third-quarter earnings season would be strong.

With its latest rise, the S&P 500 is up about 8% from its closing low on Oct. 12, and a close at its current level would mark the index’s third largest gain from a low so far in 2022’s bear market. Tuesday’s gains put the S&P 500 about 10% above its intra-day low on Oct. 13. (Graphic: S&P 500 recoveries from bear market lows, https://graphics.reuters.com/USA-STOCKS/BEAR/xmvjkgrogpr/chart.png)

Over 280 days have passed between the S&P 500’s record high and its most recent low. That compares to 33 days that the S&P 500 took in 2020 to fall from its record high close to its lowpoint as global markets reeled because of disruptions caused by the coronavirus pandemic. (Graphic: S&P 500 bear markets, https://fingfx.thomsonreuters.com/gfx/mkt/zgpobwkmzvd/Pasted%20image%201666721196292.png)

This year’s selloff has dragged the S&P 500’s forward earnings valuation down from a historically high 21 to about 15, just below its 10-year average of 17, according to Refinitiv data.

Earnings expectations have also sunk this year, with analysts on average expecting S&P 500 companies to increase their adjusted earnings per share by 6.8% in 2022. This compares with an estimate of 9.5% for July. (Graphic: S&P 500’s forward PE dips below 10-year average, https://fingfx.thomsonreuters.com/gfx/mkt/klpygedkwpg/Pasted%20image%201666721482856.png)

Still, third-quarter earnings season so far has been better than expected, with nearly three quarters of the 129 companies in the S&P 500 exceeding earnings per share estimates, according to Refinitiv data.

After this year’s collapse, many sectors are showing signs that they are on the verge of recovery. (Graphic: Every S&P 500 stock’s performance in October, https://fingfx.thomsonreuters.com/gfx/mkt/zjvqjqwjxpx/Pasted%20image%201666721787433.png)

With Amazon (NASDAQ:), Microsoft, Tesla, Nvidia (NASDAQ:) and other tech-related heavyweights still badly bruised in 2022, the S&P 500 growth index’s performance is far below the value index, which reflects smaller losses in sectors ranging from industrials to consumer staples. (Graphic: Growth loses out to value, https://graphics.reuters.com/USA-STOCKS/BEAR/xmvjkgrogpr/chart.png)

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Stocksak Editorial

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