No Letup in the Valuation Meltdown

The S&P 500’s forward P/E fell to 15.4 on Friday from just over 20.0 at the start of this year. That’s around the historical average for this valuation multiple. Lower readings typically have been associated with bear markets and recessions. The index fell into a bear market on Monday, but the jury is out on the recession call.

This year’s freefall in the S&P 500 forward P/E was preceded by even greater freefalls from around 20.0 at the beginning of 2021 for the S&P 400 MidCaps, down to 11.1 on Friday and to 10.8 for the S&P 600 SmallCaps.