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S&P 500 is overvalued, stock valuations ‘disconnected’ from reality – JPMorgan By

JPMorgan strategists have once again reiterated their concern about the sustainability of this year’s rally in U.S. equities. The S&P 500 is up 16.2% year-to-date.

The strategists point out that the situation is becoming “increasingly unsustainable” due to expanding multiples in the face of a restrictive rate environment.

“Equities are up 16% YTD mostly on multiple expansion while real rates and cost of capital are moving deeper into restrictive territory. History suggests this relationship is becoming increasingly unsustainable, posing risk to the equity multiple, especially since earnings expectations already face a high hurdle for 2024,” they wrote in a client note.

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h/t mark000

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