MarketWatch: “U.S. stocks may bounce this week, but summer selloff is only halfway done, analysts warn”By datatrekresearch in IN THE NEWS
Excerpt from MarketWatch quoting DataTrek co-founder Nick Colas:
...."Nick Colas of DataTrek pointed out in a Monday research note that “at 1.26 percentage points over Treasurys for investment-grade corporates and 3.95 points for high-yield bonds,” spreads for corporate bonds remain “remarkably low"...
That suggests that investors are simply reining in equity valuations from levels considered by many to be stretched, based on expectations for corporate earnings.
The forward 12-month price-to-earnings ratio for the S&P 500 stood at 19.4 in late July. That was higher than the five-year average of 18.6 and the 10-year average of 17.4, according to FactSet data. The index’s decline over the past three weeks has brought it to more manageable level of 18.6, in line with its five-year average.
“The disparity this month must come down to something that is unique to stocks, and that is equity valuations,” Colas said"....
Full article here on MarketWatch.