CHART OF THE DAY: Stocks Often Rise When Earnings Are Falling

button more charts
button chart prev
button chart next

Investors have recently been pessimistic on the U.S. stock market and pointed to the fact that slowing economic growth is impacting corporate earnings.

But BMO’s Brian Belski notes that “S&P 500 earnings are not U.S. GDP”.

And even when S&P 500 earnings fall, stocks often do well.

He draws our attention to this cool chart which looks at stock market performance from 1950 – 2011 to illustrate his point.

The red box references the following years – 1951, 1952, 1961, 1967, 1975, 1980, 1982, 1985, 1986, 1989, 1991, and 1998. The average EPS growth for these years was -6.6 per cent, but the average return was a staggering 22.1 per cent.

Don’t Miss: The Most Important Charts In The World >

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.