For the second time since the bull market began, profits are surging and stocks are falling, Bloomberg reported Monday.
Bloomberg compiled estimates from over 9,000 analysts and found Standard & Poor’s 500 Index companies will earn 18% more in 2011 than they did last year. Stocks are the cheapest they’ve been in 26 years, according to the report, and even if companies posted no growth, price-earnings ratios would be lower than on 96% of days in the past two decades.
Earnings could rise to over $99 in 2011, up from previous forecasts of $95 and $98 earlier this year.
There are several factors at play in the decline of market gains: rising interest rates in China, worries over Greece defaulting and the end of the $600 billion stimulus program implemented by the Fed.