U.S. Stocks Drop After 5-Day Rally on Earnings Forecasts
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The S&P 500 was valued at 15.9 times estimated earnings yesterday, the highest since December 2009, data compiled by Bloomberg show. About 87 percent of stocks in the index traded above their average prices from the past 50 days, the most since May 21, according to data compiled by Bloomberg.
The market made “a tremendous move in a very short time, so I don't think it takes much to get people to step back for a minute to catch their breath,” Walter Todd , chief investment officer at Greenwood Capital Inc., said in a phone interview from Greenwood, South Carolina . He helps manage $950 million.
AT&T Inc. and 38 other companies in the S&P 500 report results today. Profits for members of the gauge probably increased 2.5 percent during the third quarter as sales climbed 2.2 percent, according to analysts' estimates compiled by Bloomberg.
Eoin Treacy's view Wall Street rallied impressively over the last couple of weeks as the US avoided a default and the expectation of continued Fed stimulus buoyed investor expectations.
Over the medium-term, the S&P 500 Index has held a progression for higher reaction lows. In 2013 overextensions relative to the 200-day MA of approximately 150 points have been followed by at least partial mean reversions. At yesterday's peak the gap was approximately.140 points suggesting a reversionary move is more likely than not.