Investors are waiting for updates on consumer and producer prices this coming week to get the most recent assessment on inflation. Recent data releases and business earnings reports have sent conflicting messages about the direction the economy is heading and whether a recession is imminent. Despite the fact that the gross domestic product has shrunk for two consecutive quarters, Friday's strong jobs report revealed that unemployment is still low and the economy is creating jobs at a solid clip.
Expectations for corporate earnings are declining. That indicates that even after this year's decline, the stock market still runs the risk of looking pricey, according to the Wall Street Journal. The ratio of a company's share price to its earnings is frequently used by Wall Street to determine whether a stock is underpriced or overvalued. According to that standard, the market as a whole had been particularly expensive for the majority of the previous two years, during which time easy monetary policy propelled key stock indices to dozens of new highs.
That setting is no longer there. Market turmoil has been caused by concerns about inflation, the trajectory of interest rate hikes by the Federal Reserve, and the fair value of stocks. Despite rising 13% since mid-June, the S&P 500 has dropped 13% in 2022, according to the Wall Street Journal.
Expectations for corporate earnings are declining. That indicates that even after this year's decline, the stock market still runs the risk of looking pricey, according to the Wall Street Journal. The ratio of a company's share price to its earnings is frequently used by Wall Street to determine whether a stock is underpriced or overvalued. According to that standard, the market as a whole had been particularly expensive for the majority of the previous two years, during which time easy monetary policy propelled key stock indices to dozens of new highs.
That setting is no longer there. Market turmoil has been caused by concerns about inflation, the trajectory of interest rate hikes by the Federal Reserve, and the fair value of stocks. Despite rising 13% since mid-June, the S&P 500 has dropped 13% in 2022, according to the Wall Street Journal.
