First Light News: Chip Rout Rattles Equities as Q3 Earnings Season Kicks Off

The current forward 12-month P/E is 19, meaning investors are paying US$19 for every US$1 of forecast corporate profit over the next year. The 5-year average is 19.8. So, historically, over the past five years, investors have been willing to pay a higher premium for that same US$1 of future profit.

Another point I want to highlight is the market’s narrow breadth. We have only around 34% (48%) of S&P 500 constituents trading above their 50-day (200-day) MAs. However, just because a few tech giants are carrying the market does not mean the stock market is about to crash, despite some claims. Instead, while some stocks have lagged behind the big tech companies, they still have plenty of room to grow if they report better-than-expected earnings.