Financial Professionals

Market Insights

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15 Years of SPX Data

03/06/2013

SPX

2014

2013

Current

2012

2011

2010

2009

2008

2007

Earnings

$123 est.

$110 est.

$101.25

$100.72

$95.85

$83.90

$61.82

$60.43

$84.63

SPX Year-End

?

?

1540

1426.19

1257.60

1257.64

1115.10

903.25

1468.36

Fed Funds

?

0%

0%

0%

0%

0%

0%

4.25%

5.25%

Price/Earnings

12.47

13.91

15.21

14.16

13.12

14.99

18.04

14.95

17.35

Gross Margin

?

?

45.11

44.88

44.74

44.37

45.03

45.26

44.19

Operating Margin

?

?

19.83

19.97

20.27

19.47

17.64

18.18

19.18

Profit Margin

?

?

13.32

13.41

13.73

13.33

11.54

10.65

12.92

 

SPX

2006

2005

2004

2003

2002

2001

2000

1999

1998

Earnings

$85.38

$74.16

$65.72

$54.37

$46.00

$42.92

$54.82

$49.24

$43.28

SPX Year-End

1418.30

1248.29

1211.92

1111.92

879.82

1148.08

1320.28

1469.25

1229.23

Fed Funds

4.25%

2.25%

1.00%

1.25%

1.75%

6.50%

5.50%

4.75%

5.50%

Price/Earnings

16.61

16.83

18.44

20.45

19.13

26.75

24.09

29.84

28.40

Gross Margin

45.30

45.35

46.99

47.69

47.12

46.34

47.77

47.98

46.25

Operating Margin

20.18

20.02

20.04

19.09

18.25

16.65

18.71

18.89

18.32

Profit Margin

14.59

13.67

12.88

12.05

10.38

8.74

11.72

12.63

13.49

On Tuesday, March 5, 2013, the Dow Jones Industrial Average (INDU) (Figure 1.1) traded to an all-time intraday high of 14,286.37. It also closed at 14,253.77, its highest close ever. The path of recovery for the INDU from its previous peak was slightly shorter than following the tech bubble burst in January 2000. It wasn’t until early October 2006 that the INDU traded above its January 2000 high. The INDU proceeded to continue moving higher from October 2006 to a new peak in October 2007, which was finally surpassed yesterday.

The S&P 500® Index (SPX) (Figure 1.2) has yet to exceed its October 2007 all-time 1,576.09 high. The Russell 2000® Index (RTY) (Figure 1.3) was actually the first of the four major U.S. indices to exceed its previous high, trading to a new all-time level of 932.00 in February. The Nasdaq 100 (NDX) (Figure 1.4) remains well below its March 2000 bubble high at 4,816.35, seemingly unreachable at this point.

I was asked yesterday on CNBC if I expected the four major indices to continue moving higher. My answer, yes. In providing that answer I have also shared at the forefront of this commentary 15 years of relevant data related to U.S. monetary policy, SPX earnings, valuations, and margins. Within the data, I expect there is evidence to support my expectations that the four major indices can move higher from here.  

Lastly, let me emphasize that the evolution, and advancement, of the capital markets allows for much greater ease of portfolio risk protection. If, in fact, I am wrong in my expectation, and this is the advent of the next secular peak for the markets, investors can source with great liquidity any type of portfolio protection they so desire right now. In the wake of 2000 and 2007, we should have learned that valuable lesson.

Figure 1.1 Dow Jones Industrial Average (INDU)

Source: Bloomberg

Figure 1.2 S&P 500 Index (SPX)

Source: Bloomberg

Figure 1.3 Russell 2000 Index (RTY)

Source: Bloomberg

Figure 1.4 Nasdaq 100 (NDX)

Source: Bloomberg

Virtus Investment Partners provides this communication as a matter of general information. The opinions stated herein are those of the author and not necessarily the opinions of Virtus, its affiliates or its subadvisers. Portfolio managers at Virtus make investment decisions in accordance with specific client guidelines and restrictions. As a result, client accounts may differ in strategy and composition from the information presented herein. Any facts and statistics quoted are from sources believed to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. This communication is not an offer or solicitation to purchase or sell any security, and it is not a research report. Individuals should consult with a qualified financial professional before making any investment decisions.