The S&P 500 and Its Earnings

Here’s the S&P 500 along with its earnings. The index is in black and it follows the left scale. The earnings are in yellow and follow the right scale.


The two lines are scaled at a ratio of 16 to 1. That means whenever the lines cross, the market’s P/E Ratio is exactly 16.

As you can see, earnings have ticked down for the last four quarters but are expected to rise again for Q4. The forward part of the earnings line is Wall Street’s estimate.

Posted by on December 30th, 2015 at 9:38 am

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