Feb 21, 2017

Walmart guides stock market to new record highs

Walmart earnings were a pleasant surprise to investors Tuesday morning, as it beat expectations on revenue growth and posted strong online sales numbers in the first quarter to fully include its acquisition of e-retailer Jet.com. Investors bid up the price of Walmart stock close to 4% in early trading, helping the Dow Jones rise roughly 125 points, before paring back some of those gains.

Why it matters: Overall stock prices relative to earnings have been rising steadily of late, raising the question of just how much higher the stock market can go. Walmart has avoided the slump in same-store sales growth that has plagued the bricks and mortar retail sector of late, but investors are bidding up Walmart on the hopes of higher earnings rather than actual results, as estimated earnings per share in 2017 will come in two cents below 2016 performance.

Data: multpl.com; Chart: Andrew Witherspoon / Axios

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The S&P 500 could be overvalued

The New York Stock Exchange on Jan. 8. Photo: Xinhua/Wang Ying via Getty Images

The S&P 500 is too rich on a number of levels, according to calculations in a new paper from Ned Davis Research that examines the index's price to earnings, profits and price to sales.

What's happening: Not only is the benchmark stock index's current P/E ratio "well above fair value," S&P companies' prices relative to sales is at a record high, “well in excess of what they were in 2000 or 2007 at those peaks,” Ned Davis, the company's senior investment strategist, says in a note to clients.

Go deeperArrowJan 9, 2020

Wall Street has its best year since 2013

Data: FactSet; Chart: Axios Visuals

Wall Street had its biggest annual gain in six years — with the S&P 500 rising 29% and the Nasdaq Composite rising 35% in 2019. The Dow lagged behind other indices, but saw its biggest yearly gain since 2017.

Why it matters: U.S. stocks rebounded from 2018's year-end meltdown to log impressive gains, despite uncertainty stemming from the trade war and a slowdown in economic growth.

AMD's hot 2020 start could lead to another S&P record

Data: Investing.com; Chart: Axios Visuals

AMD was the best-performing stock on the S&P 500 in both 2018 and 2019, and it got off to a hot start in 2020, rising 7.1% on Thursday to touch a fresh all-time high.

The state of play: The stock rose nearly 80% in 2018, despite falling 40% during that year's disastrous fourth quarter, and it gained 148% in 2019, according to MarketWatch. The company's previous record high stock price was set June 21, 2000.

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