LIVE MARKETS-S&P 500's forward PE dips to 2023 low, and below its 10-year average

By Reuters News

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S&P 500'S FORWARD PE DIPS TO 2023 LOW, AND BELOW ITS 10-YEAR AVERAGE

Expectations are high heading into third-quarter earnings season, and that optimism is nowhere more evident than the S&P 500's .SPX forward PE.

The benchmark in recent days has seen its forward earnings multiple drop to its lowest since April 2023, when US President Donald Trump's "Liberation Day" tariff announcements threw global markets into a tailspin.

The S&P 500's is now value at about 19.1x forward earnings, marginally below its 10-year average forward PE of 19.2, according to LSEG data. It fell to as low as 17.6 in April 2023.

While the drop in the S&P 500's PE in 2023 was the result of tumbling stock prices, its more recent decline comes as the index trades near record highs. With the S&P 500 up 13% so far in 2026 after hitting a record high last week, the recent drop in its forward PE is almost entirely the result of rising earnings expectations.

Analysts on average see third-quarter S&P 500 earnings surging over 30%, with AI-related tech companies fueling most of that growth.

While the Alphabet, Microsoft and others have signaled confidence in their massive build-out of AI data centers, smaller AI-related companies could see their plans interrupted. Hotter-than-expected inflation report on Wednesday sparked a sell-off in AI-related stocks that have relied on debt to fuel their expansion, making them sensitive to worries that the Federal Reserve could aggressively hike interest rates.

(Noel Randewich)

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Inflation gauges https://www.reuters.com/graphics/USA-STOCKS/zdvxekaykpx/inflation.png

Real wage growth https://www.reuters.com/graphics/USA-STOCKS/movardymypa/realwages.png

Mortgage rates, demand https://www.reuters.com/graphics/USA-STOCKS/gkvleajmbpb/mba.png

S&P 500's forward PE sinks to lowest since 2023 https://fingfx.thomsonreuters.com/gfx/mkt/myvmrxjogpr/Pasted%20image%201791991986237.png

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