Rate cuts arent always good for the market. It can be sign of an economic slowdown irrc. So if rates are expected,folks may be selling early.
"Valuations matter too. When the market had a decline of at least -20% after the Fed’s first cut, the average S&P 500 trailing PE ratio was 18. On the other hand, when the S&P 500 had a decline of less than -10%, the average PE ratio was 11.4. The current P/E ratio of 22 could be another reason to be more cautious once the Fed makes its first cut."
Last I checked the average PE ratio of the S&P was close to 30. So a 20% drop would be generous. So wouldnt we be looking at somewhere around $440 if SPY drops?
"Valuations matter too. When the market had a decline of at least -20% after the Fed’s first cut, the average S&P 500 trailing PE ratio was 18. On the other hand, when the S&P 500 had a decline of less than -10%, the average PE ratio was 11.4. The current P/E ratio of 22 could be another reason to be more cautious once the Fed makes its first cut."
Last I checked the average PE ratio of the S&P was close to 30. So a 20% drop would be generous. So wouldnt we be looking at somewhere around $440 if SPY drops?