From MoneyWeek · · 1m 30s
US stocks climb amid rising rates
US stocks rise despite higher interest rates and bond yields.
In brief
US stocks rise despite higher interest rates and bond yields. US stocks climbed 12% this year as S&P 500 earnings rose 50% year on year, with valuations falling to a forward P/E ratio of 19. Originally reported by MoneyWeek.
US stocks climb
US stocks continue to climb despite rising interest rates and squealing bond yields.
S&P 500 up 12%
The S&P 500 index has risen another 12% so far this year, with the technology-focused Nasdaq 100 up a fifth.
Earnings surge
S&P 500 earnings rose 50% year on year in the second quarter, an incredible number that you usually only see during a recovery after a recession.
Broad-based rally
Energy firms are raking in money from rising fuel prices while banks are throwing off cash because of higher interest rates.
AI boom supports growth
The AI boom is also supporting strong performance at industrials, whose expertise in power management and construction is essential for the data centre build-out.
Valuations fall
The S&P 500 trades on a forward price-to-earnings ratio of 19, down from 23 a year ago.
Why valuations fall
It prices in an assumption that the current AI splurge won't last forever, reflects concerns that higher inflation may ruin the party, and faces competition from fixed-income securities.
GDP growth strong
The Atlanta Fed's GDPNow tracker estimates that GDP grew at an annualised pace of 5% in the just completed third quarter.
The takeaway
US stocks climbed 12% this year as S&P 500 earnings rose 50% year on year, with valuations falling to a forward P/E ratio of 19.
