May 13, 2023
The S&P 500 Index ended April at 4,169.48, up +1.5% that month, and up just +0.9% from a year ago.
The Dow Jones Industrial Average (DJIA) ended April at 34,098.16, up +2.5% that month, and up +3.4% from a year ago.
The Nasdaq Composite Index ended April at 12,226.58, flat that month, and down -0.9% from a year ago.
As of May 11, the MSCI Global Index stood at 2,809.35, up +0.7% from a month ago, and up +4.0% from a year ago, but still down -13.3% from its peak in January 2022.
As of May 11, the CBOE Volatility Index (VIX), which measures expected stock market volatility based on S&P 500 index options, stood at 16.93, down -46.7% from a year ago.
The Price/Earnings (P/E) Ratio for the S&P 500, based on 12-month trailing operating earnings, stood at 19.49 for 4Q22, and is expected to rise to 20.44 for 1Q23. With 89.4% of companies having reported, operating earnings per share are expected to be $53.41 for Q1, up +6.0% from Q4 and up +8.2% from the same period a year ago.
The Shiller P/E Ratio for the S&P 500, which is based on average inflation-adjusted earnings from the previous 10 years, and is meant to adjust for the whole business cycle, stands at 28.91.
According to Prof. Aswath Damodaran of NYU’s calculations, the implied Equity Risk Premium (ERP), based on cash yield, for the S&P 500 was 5.3% at the start of May 2023, down from 5.4% in April and 5.9% at the start of the year.
The historical average since 1960 is 4.2%, and since 2002 is 5.0%. (A wider ERP than average suggests expected equity returns are relatively cheaper than bond returns, while a narrower ERP suggests equities are overpriced relatively to risk).
You can find his calculations here:
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