Stocks Have Gotten Cheaper. Why They Could Get Cheaper Still

Mar 09, 2022

https://liquidity-provider.com/app/uploads/2022/03/dizajn-bez-nazvaniya-2022-03-10t194035.566.png

Stocks have gotten a whole lot cheaper amid this year’s slump. They might get considerably cheaper in the following months.

The S&P 500 stock index has plunged into correction territory in recent days, down more than 10 percent from its high. Estimates for corporate earnings are still climbing. It has been a falling multiple on those earnings that has triggered the devastation. The aggregate market value on the S&P 500 is around 18 times the aggregate estimated 2022 profits per share for businesses on the index, down from 21 times earlier this year.

Driving the multiple lower has been a few variables. Long-dated bond rates have risen, which makes future earnings less desirable. Higher rates also lower economic demand. Finally, the risks to economic growth brought on by the Russia-Ukraine conflict have already affected stocks and might continue to damage them in future months.

While this may be a favorable moment for longer-term investors to buy equities, others should be wary that market values still have further downside potential.

When the market is as volatile as it has been, values often fall more than they already have. The Cboe Volatility Index, a barometer of predicted fluctuations in stock prices, has averaged slightly under 30 in the previous month, signifying heightened volatility. That’s up from below 20 to start the year, according to Morgan Stanley statistics. When equities are more volatile, investors tend to seek a bigger equity-risk premium.

Looking at this correlation, the S&P 500’s equity-risk premium should be closer to 4.5 percent , predicts Morgan Stanley. Instead, S&P 500 2022 earnings are returning investors 5.5 percent on today’s index level, which is 3.6 percentage points more than the yield on the safe 10-year Treasury note.

Morgan Stanley anticipates the equity-risk premium growing to 4.5 percentage points. from the current 3.6 points. If that happened, the earnings multiple would decrease to slightly under 16 times.

That would smash stocks. With S&P 2022 500 EPS forecasts at $229 Tuesday, according to FactSet, a 16 times multiple would drop the index down to 3,664. That’s a nearly 12 percent reduction from today’s level.

That decrease is consistent with the downside potential that market experts envision. Instinet’s head market technician, Frank Cappelleri, said that the S&P 500 might fall below 3,620, given the index’s negative track thus far.

None of this means the stock market will necessarily fall that much. It only indicates it’s within the realm of possibility and that, at the very least, investors are likely to demand an even larger return on stocks shortly. That might drive prices lower.

Subscribe Our Newsletter

JP Morgan: Crypto is Flowing out of Exchanges. The Rebound is Not Even Close

Alexander

JP Morgan: Crypto is Flowing out of Exchanges. The Rebound is Not Even Close

According to the investment bank’s analysts, exchanges are suffering big capital outflows, and the stablecoin market is not feeling good either.

Crypto
Omicron Will Hurt the U.S. Economy. Why the Pain Won’t Last.
Omicron Will Hurt the U.S. Economy. Why the Pain Won’t Last.

Over the last few weeks, the Omicron form has increased Covid-19 cases to record highs in cities across the United States, disrupting Christmas travel plans and pushing workers and consumers out of offices and stores.

Banks and Finance
Liquidity Provider

Top 5 Forex CRM Solutions for 2022
Brokerage businesses utilize CRM (Customer Relationship Management) to communicate with their clients and manage their internal workflow. At this level, organizations build customer relationship management systems around their methods and concepts for engaging with traders, resulting in substantial disparities amongst brokers.

discover
How Do Crypto Payments Work? - Liquidity Provider: Articles

Liquidity Provider

How Do Crypto Payments Work?

Retailers, consumers, and enterprises are increasingly accepting cryptocurrency payments. While it is possible to send cash manually, payment gateways make it much easier to accept cryptocurrency payments.

Crypto Payments

Contact Us

Contact the Liquidity Provider
for any questions and advertising inquiries b2broker

    Please fill out this contact form to get in touch with us

    / 3000

    By clicking “Get in touch” button, you agree to the privacy policy

    Successful!
    Thank you for your request.
    We will contact you shortly.
    Close

    Alexander

    Is IUL a Good Investment Strategy? — A Guide for Beginner Investors

    Is IUL a Good Investment Strategy?

    Alexander

    Are Crypto Wallets Safe? — Tips to Ensure Maximum Protection of Your Digital Assets.

    Tips to Ensure Maximum Protection of Your Digital Assets

    Alexander

    Roth IRA Guide: What It Is and What You Need to Know.

    Roth IRA Guide: What It Is and What You Need to Know

    Alexander

    From Gold to Index Funds and Crypto: Where to Invest in 2023 for Long Term?

    From Gold to Index Funds and Crypto: Where to Invest in 2023

    Alexander

    Understanding Algorithmic Trading: A Guide for Beginners

    Understanding Algorithmic Trading: A Guide

    Alexander

    Stop Vs. Stop-Limit Order: How Do They Differ?

    Stop Vs. Stop-Limit Order: How Do They Differ

    Alexander

    Invest in the Intelligent Future: The Best AI Stock Market Leaders of 2023

    Invest in the Intelligent Future: The Best AI Stock Market Leaders of 2023

    Deborah Middleton

    How MEC Rules Can Impact Your Life Insurance Policy

    How MEC Rules Can Impact Your Life Insurance Policy.

    Deborah Middleton

    Navigating the Ethical Landscape of AI: Challenges and Solutions

    Navigating the Ethical Landscape of AI: Challenges and Solutions

    Deborah Middleton

    Managing Your Financials The Right Way – A Startup Guide 

    Managing Your Financials The Right Way - A Startup Guide

    Anna

    A Beginner Guide To The Crypto Analysis Tools.

    A Beginner Guide To The Crypto Analysis Tools.

    Anna

    A Brief Introduction to Scalping

    A Brief Introduction to Scalping.

    Anna

    How to Invest in Stocks: A Beginner’s Guide

    How to Invest in Stocks: A Beginner’s Guide

    Anna

    Tips On Finding Crypto Liquidity Providers In 2023

    Tips On Finding Crypto Liquidity Providers In 2023.

    Anna

    Forex Liquidity in 6 Questions and Tips on How to Become Successful in Trading

    Forex Liquidity in 6 Questions and Tips on How to Become Successful in Trading

    Anna

    A Brief and Comprehensive Guide to Spot Trading.

    A Brief and Comprehensive Guide to Spot Trading.

    Anna

    What is The Difference Between Liquidity Provider and Liquidity Aggregator?

    What is The Difference Between Liquidity Provider and Liquidity Aggregator?

    Tamta

    What Is SWIFT Banking System?

    What Is SWIFT Banking System?

    Tamta

    How Liquidity Providers Drive The Foreign Exchange Market

    How Liquidity Providers Drive The Foreign Exchange Market

    Tamta

    How to Start Investing In Crypto

    How to Start Investing In Crypto

    Tamta

    5 Best Crypto CFD Liquidity Providers 2023

    5 Best Crypto CFD Liquidity Providers 2023.

    Tamta

    The Power Of Liquidity For Crypto Exchanges

    The Power Of Liquidity For Crypto Exchanges

    Tamta

    Institutional Forex Liquidity Explained: Why Do We Need It?

    Institutional Forex Liquidity Explained: Why Do We Need It?

    Tamta

    What Is Return On Investment (ROI), And How Can You Calculate It?

    What Is Return On Investment (ROI), And How Can You Calculate It?
    Latest News - Liquidity Provider: Business & FinTech Media
    • News
      • Stocks
      • Banks and Finance
      • Companies
      • Crypto
      • Forex
      • AI
      • Technology
      • DeFi
      • NFT
    • Articles
      • Crypto Payments
      • Trading
      • Crypto Exchange Business
      • Forex Business
      • Fintech
      • Liquidity
      • FinTech Awards
      • Blockchain
      • Investing
      • NFT
      • DeFi
    • More
      • Videos
      • Liquidity Providers List
      • Crypto Payment Providers
    [email protected]

    © 2023 Liquidity Provider. All Rights Reserved

    Privacy Policy Cookie Policy
    This site is registered on wpml.org as a development site.