There was lots worrying investors last week, and there still is. But the stock market has a habit of climbing a wall of worry. It seems to be doing so now.
Investors have been watching analysts raising their earnings expectations faster than stock prices have been rising (chart). As a result, stocks have gotten cheaper, assuming that analysts' exuberant earnings expectations are rational. Investors may be coming around, gaining more confidence in FEMO (i.e., fabulous earnings momentum).
If the forward P/E of the S&P 500 has bottomed and starts moving higher again, it will be because the price index is rising faster than forward earnings.
In particular, investors may be rethinking the valuation of the S&P 500 Information Technology and Communication Services sectors, especially the Magnificent-7 and the S&P 500 Semiconductor industry. They've all gotten cheaper on a forward P/E basis, as analysts' earnings expectations have outpaced their stock prices (charts).
