“The Price/Earnings Ratio (“P/E”) on a stock or an equity index has two distinct inputs; the price (numerator), as observed in the market and, generally, the “expected” earnings over the next year (the denominator). This latter input is derived by using the consensus estimates of the myriad of sell-side analysts. Since the beginning of the year, the “Forward P/E” on the S&P 500 has fallen from 22.8x to 18.0x..”

To read the full version of CapAcuity’s Chief Investment Officer’s quarterly market perspective for 2Q21, click here.