Market Volatility - FINANCIAL-24
Last night the S&P 500 hit 2,050 in overnight trading. The market then ended the day (in an astonishing reversal) at 2,165. Such drastic movement in the S&P 500 simply underscores a vulnerability in the markets that stems from high valuations.
The S&P 500 is currently trading at a price-to-sale ratio of 1.91, a record high level that is significantly higher than the historical average of 1.45 (calculated based on the last 15 years of data). Moreover, the prospects for earnings growth are constrained by a dollar index (DXY) trading at 99 (at early 2017 market correction levels) and a US economy operating close to full employment.
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