US, WASHINGTON (ORDO NEWS) — Concerns over the spread of the new coronavirus have swayed the global financial markets, and the U.S. stock market has continued to plummet. However, it is very difficult to identify opportunities for pushing.
According to Refinitive data, the price-to-earnings ratio (PER) of the S & P 500 Index, which is based on earnings forecasts for next year, fell 14.2 times on March 18 from more than 19 times at the end of February.
That is to say that it has fallen from a high level since mid-2002 to a level below the historical average.
However, these numbers can be misleading. Many market participants believe that a downward revision to overall corporate earnings forecasts has not yet fully factored in the economic impact of the new coronavirus.
“Even this year’s PER is a bit difficult to judge. Earnings forecasts are being revised down. It’s still too high now,” said James Lagann, director of wealth management research at DA Davidson. It’s very difficult even to figure out.”
Credit Suisse analysts note in a note dated 18 that consensus forecasts for the 2020 results of the 500 companies in the S & P 500 will increase by 2.7%, but only to those revised in the last seven business days. He pointed out that the total would decrease by 0.7%. “Our forecasts have been revised down further. The new numbers more accurately reflect the current reality,” he said.
BofA Global Research revised its 2020 earnings forecast for S & P 500 companies to 15% lower profits on Tuesday.
With the release of the first quarter results in mid-April this year, the impact of the new corona on the economy may gradually become apparent.
“I have absolutely no idea what the results will be. It’s probably not clear until the first quarter earnings release season,” said Allie Invest’s chief investment strategist Lindsay Bell. It’s not surprising that some companies withdraw guidance.”
Logistics giant FedEx on Tuesday and hotel chain giant Marriott International on Tuesday withdrew its forecasts for 2020 due to the impact of the new Corona.
The S & P 500 has already fallen 28.8% from its record high on Feb. 19 at the closing price.
On the other hand, some observers, especially long-term investors, are looking for opportunities to buy a spot while looking at the extent of the sharp fall.
“We don’t buy now, but there are discussions about buying places,” said Brad McMillan, Chief Investment Officer of Commonwealth Financial Network, who said that dividends outweighed 10-year U.S. Treasury yields. “It’s hot now,” he said. “Equities may have further reduced stock prices, but are now reaching economically attractive levels.”
DA Davidson’s Lagan believes that corporate performance is likely to decline this year, but will increase in 2021 “very likely.”
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