Percentage Contribution of Returns Between Dividends, Earnings and Valuation While multiple expansion has played an important role in boosting S&P 500 returns, future performance may depend more on earnings growth. Image: Goldman Sachs Global Investment Research
Gold Holdings vs. Gold Price The outlook for gold remains bullish, driven by falling interest rates and sustained central bank purchases, with multiple forecasts converging around the US$3,000 mark for gold prices by the end of 2025. Image: Goldman Sachs Global Investment Research
U.S. Federal Debt Growth and Gold Price While the increase in U.S. federal debt has traditionally correlated with higher gold prices, multiple other factors significantly influence gold’s market value. Image: Deutsche Bank
Average 1-Month S&P 500 Return vs. Change in 10-Year U.S. Treasury Yields The S&P 500 typically struggles when U.S. Treasury yields rise quickly. This is largely due to decreased stock valuation multiples, especially for high-priced mega-cap growth companies that thrive in low-rate environments. Image: Goldman Sachs Global Investment Research
Fed Funds Rate Expectations Despite the initial anticipation of multiple rate cuts in 2024 as suggested by the Fed’s “dot plot,” the current market sentiment indicates a more reserved outlook, with fewer rate cuts in 2024. Image: BofA Global Investment Strategy
U.S. Dollar vs. S&P 500 Index Forward Price/Earnings Keeping a close eye on the correlation between the U.S. dollar and S&P 500 valuation multiples is essential, especially considering the potential end of the greenback’s bull market cycle. Image: Morgan Stanley Wealth Management
U.S. Bank Reserves as a Percent of GDP As bank reserves relative to GDP gradually return to normal levels, they will no longer contribute to the upward momentum of equity valuation multiples. Image: Morgan Stanley Wealth Management
Valuation – S&P 500 Price/Earnings Ratio The S&P 500 P/E multiple is expected to remain above the average level observed since 1990, indicating investors’ willingness to pay more for earnings, possibly due to optimism about future growth. Image: Goldman Sachs Global Investment Research
Valuation – S&P 500 Forward P/E and U.S. 10-Year U.S. TIPS Yield The S&P 500 forward P/E multiple tends to be negatively impacted by higher real interest rates. Image: The Daily Shot
Valuation – S&P 500 PER and U.S. CPI Inflation Falling headline inflation in the United Sates has contributed to the increase in valuation multiples. Image: Morgan Stanley Wealth Management
Valuation – S&P 500 P/E, S&P Equity Risk Premium and U.S. 10-Year Treasury Yields Significant multiple expansion in the absence of a corresponding increase in earnings growth can generally be a warning sign that U.S. stocks are getting too expensive. Image: Morgan Stanley Research