Markets Remain Dicey Ahead of Fed

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As of April 30th, the S&P has gone 138 days without a 10% correction — still short of the 172-day average since 1928. But the ES has jumped 24% in the past six months (about 185 days), which supports arguments for a correction. 

According to FactSet, the multiyear rally has arguably sent stocks to overvalued levels. The S&P 500’s forward PE ratio — a gauge of market valuation based on earnings estimates for the next 12 months — stood at ~20 as of April 26, exceeding the five-year average of 19.1 and the 10-year average of 17.8. 

According to a CFRA analysis of S&P data, corrections generally don’t stick around long. Since 1985, declines between 10% and 20% for the S&P 500 have lasted only 97 days on average — or about three months. 

Yesterday was an overload. Secretary Janet Yellen came under fire from Republican lawmakers over a quip from President Joe Biden about letting tax cuts enacted by predecessor Donald Trump expire. Yellen repeatedly emphasized that the administration’s principles on tax policy had not changed and that Biden supports retaining tax. Below are a few headlines from her testimony.

• YELLEN: BIDEN HAS BEEN CLEAR THAT ANYONE UNDER $400000 WILL NOT FACE TAX INCREASES

• US TREASURY SECRETARY YELLEN: I AM CONCERNED ABOUT WHERE WE'RE GOING WITH THE US DEFICIT.

• US TREASURY SECRETARY YELLEN: THE US NEEDS SIGNIFICANT STEPS TO REDUCE BUDGET DEFICIT.

There were so many headlines it was impossible to keep up.