S&P 500 down 9.2 percent while P/E ratio drops 18 percent, Jurrien Timmer notes

S&P 500 down 9.2 percent while P/E ratio drops 18 percent, Jurrien Timmer notes
S&P 500 falls, P/E ratio contracts

The S&P 500 index declined 9.2 percent from its recent highs during a challenging week across asset classes. Jurrien Timmer shared that the index’s price-to-earnings (P/E) ratio is down 18 percent in the same period.

According to Timmer, the 9 percentage point difference between the S&P 500 drop and the P/E ratio contraction can be attributed to an earnings cycle that is currently withstanding market pressures.

Timmer previously highlighted that the S&P 500 saw a 7.6% pullback alongside a 20% drop in its trailing P/E ratio earlier this year, with international indices also under pressure from similar declines. He has also discussed the link between sudden oil price spikes and equity drawdowns in past market cycles, including those in 1973 and 2022. These observations frame the current P/E contraction within a broader history of market stress.

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