Tied at the Hip: Stock Prices and Earnings Growth
- Measuring the Relationship Between Stocks and Earnings: The chart tracks the S&P 500 Total Return (YoY) alongside 12-Month Forward Earnings Growth (YoY) since 2000.
- A Look at the Data: Over the past 12 months, the S&P 500 has generated a total return of 17.6% with growth in 12-month forward earnings estimates of 36.7%.
- Investment Implications: While short-term swings are driven by sentiment and noise, the long-term message is clear. Earnings growth is the engine behind stock returns.
