S&P 500 stocks at cheapest for 23 years, report claims

A DOUBLING in corporate profits since 2009 means the Standard & Poor’s 500 Index is cheaper than any time during its 34 peaks since 1989, according to new research.

Companies in the US index trade at 14.1 times earnings after increasing 102 per cent since March 2009, Bloomberg data shows.

But the information provider also said traders have pushed the price of contracts that pay on a 20 per cent fall in the S&P to the most since 2007, compared with ones betting on a surge of 20 per cent.

Profits grew 99 per cent between the end of 2009 and 2011, and are forecast to rise another 12 per cent this year and 13 per cent in 2013, the data showed.

The S&P closed at 1,374.09 on 1 March, moving back to 2008 highs, after a jump in bank shares and further upbeat data on the labour market.

New US claims for unemployment benefits, which dropped 2,000 to 351,000 in the latest week ­– a near-four year low ­– were viewed as another sign the economy may be on the mend.

The fall was partly offset by an Institute for Supply Management report showing the pace of growth in the US manufacturing sector slowed unexpectedly in February.