The strongest driver of price movements of shares - profit corporations, as well as earnings growth expectations from analysts - on materials AMarkets.
Therefore, the situation is no surprise: the share price fall, when reduced expectations for profits. However, this correlation is not always respected by the market - is often overlooked. Especially in the short-term time frames.However, in the most recent bull rally stock prices rose - and this is despite the fact that the expectations of profit falls. This trend is, in fact, worked for years in the US market. But recently the situation has changed.
According to the report, Morgan Stanley, for the first two months of the third quarter of 2015, analysts lowered expectations for quarterly profits for the companies S & P 500. EPS index fell by 2.7% - to $ 29.25 versus $ 30.06 for the period. Cost broad market index also decreased in the first 2 months of 2015. From June 30 to August 31, the cost S & P fell 4.4% (to 1972.18 at the level of 2063.11). And this situation (when the value of EPS fell parallel to cost S & P), I must say, for the first time recorded c4 first quarter of 2012. At intervals the first 2 months of the previous 10 quarters (Q113-Q215) index value grew and the quarterly EPS declined.
Morgan Stanely expert concludes that this situation is profitable long-term investors. So it gives a chance to play their long-term strategy in the future.
EPS S & P500 vs. price dynamics of shares of the index: