Potential Correction Ahead!Economic Index VS. S&P 500

AInvestWednesday, Jul 17, 2024 6:43 am ET

1min read

Since 2018, there has been a strong correlation between the Bloomberg Economic Surprise Index and the S&P 500 P/E ratio.

However, as we entered 2024, the surprise index has been steadily declining, while the US stock market has displayed wild performance. How long can this disparity between the two sides persist?

According to historical trends, the five-year average for the S&P 500 P/E ratio is approximately 18.8. If it returns to this average, the S&P 500 index could face a correction of approximately 15%!

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