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Key Points
The S&P 500 index fell by 1.5% in November 2023, facing headwinds from concerning economic data, including a contraction in the U.S. manufacturing sector for the eighth consecutive month and historically low consumer sentiment.
As of late October, the index’s forward price-to-earnings (P/E) ratio reached 23.1, a valuation level not seen in 25 years, raising alarms among investors about potential market corrections should this valuation revert to historical averages. If it aligns with the five-year average of 20, the index could drop by 10%.
Goldman Sachs estimates that by the end of 2025, U.S. companies and consumers will bear 77% of tariffs, with consumers paying 50% of escalated costs amid rising inflation and economic uncertainty, severely affecting consumer confidence.
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