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S&P 500 FORWARD PE DROPS TO LOWEST SINCE 'LIBERATION DAY' SELLOFF

For investors willing to look beyond the U.S. and Israeli war with Iran and focus on long-term returns, the U.S. stock market appears increasingly attractive, at least in terms of earnings multiples.

The S&P 500 is trading at 19.4 times expected earnings. That's its lowest PE since April 2025, when President Donald Trump's "Liberation Day" tariff announcement threw global financial markets into a tailspin and briefly pulled the S&P 500 down to 19.2 times expected earnings.

The S&P 500's PE has averaged about 19 over the past 10 years, with that 10-year average steadily increasing as high-growth tech-related companies like Alphabet GOOGL.O and Palantir PLTR.O account for more and more of the overall stock market.

The last time the S&P 500 fell below its 10-year average was October 2023, when it dropped as low as 17.6 according to LSEG data.

Remarkably, the recent decline in the S&P 500's PE comes even after the index recovered over 7% in recent sessions on expectations that oil tankers will once again be free to transit the Strait of Hormuz, providing some relief from fears that surging oil prices will lead to a global inflation spike. The S&P 500's PE was above 22 at the start of 2026.

The S&P 500's seemingly attractive multiple rests on expectations of increasingly strong earnings. Analysts on average see S&P 500 companies growing their earnings 19.3% in 2026, up from an expectation of 15.6% in January, according to LSEG I/B/E/S.

(Noel Randewich)

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