Stock swoon resets valuations

Since the S&P 500 reached an all-time high a year ago, the index’s price-to-earnings ratio has fallen over 20% from its peaks to levels closer to historic averages. — Reuters

NEW YORK: US stocks are starting 2023 at much cheaper levels after Wall Street’s biggest swoon in 14 years but the potential for a recession combined with higher interest rates means equities may not be priced low enough to lure investors.

Since the S&P 500 reached an all-time high a year ago, the index’s price-to-earnings ratio has fallen over 20% from its peaks to levels closer to historic averages.