Corner of Wall & Main: No More Empty Pockets


Chris Versace and Lenore Hawkins

 | Jul 09, 2014 | 6:00 PM EDT
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Tuesday, the S&P 500 experienced its biggest one-day drop since mid-May as earnings season kicked off and market participants looked to see if second-quarter performance supported the current 18x price-to-earnings ratio on reported earnings, which is well above the 13.8 median for the S&P 500 since the mid-1970s. Annual earnings growth for the S&P 500 sits at 5.4% vs. 3.4% for the first quarter, again bucking the historical trend for declining forecasts throughout any given year. The S&P 500 has yet to experience a 1% or more decline in 56 days and is optimistically priced heading into the reporting period.

Meanwhile, European markets have experienced four straight days of declines with grim economic data coming out of Germany and the U.K., while volatility is finally emerging after three months of relative calm, up 16% in the past two sessions, though still down 13% for the year and bouncing around seven-year lows. As you might recall, in May we suggested adding iPath S&P 500 VIX ST Futures ETN (VXX) to your portfolio as insurance at the end of May.  ...551 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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