SFY - Why Mr. Market's Earnings Expectations May Still Be Far Too High
One reason for the record-setting stock market crash we witnessed in the first quarter was a rapid reappraisal of the earnings situation for the S&P 500. As I noted here back in January, stocks were discounting about a 30% jump in earnings growth over the coming six months, a pretty herculean assumption. When COVID-19 destroyed the prospect of earnings growth for the first half and introduced the distinct probability of a major earnings decline, the S&P 500 was forced to adjust and in dramatic fashion.
However, it appears that the index is now discounting just