Lates News

From a historical perspective, the valuation of the US stock market is astonishingly high. However, according to Bank of America strategist Savita Subramanian and her team, this high valuation may not be without basis upon closer examination. In a report sent to clients on Wednesday, the Bank of America strategist team noted that out of the 20 internal indicators they track, 19 indicate that the valuation of the S&P 500 index is statistically "rich", with 4 reaching historical highs. Nevertheless, the report points out that certain inherent characteristics of the current constituents of the S&P 500 index including lower financial leverage, smaller profit fluctuations, higher efficiency, and more stable profit margins compared to the past few decades all contribute to supporting the currently high valuation. This analysis sharply contrasts with another school of thought on Wall Street, which compares the current high valuation to the burst of the "dot-com bubble" at the turn of the century and warns of the risk of a bubble recurrence.