Wednesday, November 10, 2021

Inflation drags down S&P 500 earnings yield to record low

  • S&P 500’s real earnings yield has plunged to its lowest on record at -2.3%, surpasses prior low of -2.1% in 1974
Inflation has never influenced U.S. stock valuations more than it does now. The S&P 500 Index’s real earnings yield, adjusted for changes in consumer prices, shows as much. October’s yield was negative 2.3%, according to monthly data compiled by Bloomberg. That’s the lowest reading since the S&P 500 was introduced in 1957. The previous low was negative 2.1% in March 1974, when the index was falling and the economy was in a recession. The indicator was highlighted by Liz Ann Sonders, chief investment strategist at Charles Schwab Corp., in a Twitter post Thursday.

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