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Wednesday
Jan162013

S&P 500 and Sector P/E Ratio Charts

Below is an updated look at P/E ratio (trailing 12-month) charts for the S&P 500 and its ten sectors.  As shown, the S&P 500's P/E ratio has creeped up to 14.80 during the current rally, but it's still below the high it reached back in September when the S&P 500 hit its prior bull market high.  Earnings reports will be flooding the market over the next few weeks, so we could see some swings in the S&P's P/E ratio depending on how strong or weak earnings are for the largest stocks in the US.

P/E ratios for most sectors have also increased throughout this rally.  Telecom has the highest P/E ratio at 21.98, followed by Consumer Discretionary and Consumer Staples.  Interestingly, two of the three sectors with the highest P/Es are defensive sectors (Telecom and Consumer Staples).  The Utilities sector also has a high valuation for a defensive sector at 15.44.  Sectors like Financials, Industrials, Energy and even Technology have more attractive valuations than Utilities.  While Technology is typically thought of as a high-risk growth sector, it actually has the fifth lowest P/E ratio in the S&P 500.