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SEI Forward: Starting points matter

April 3, 2024
clock 4 MIN READ

Writing my first Forward of 2024 less than two weeks since the start of spring, I find myself focusing on new beginnings, or better yet, starting points. In short, starting points matter—in life, in business, and in markets. In that vein, I’d like to reflect on a few starting points as we embark on a new season and a new quarter.

U.S. equities are starting from a high point 

Firstly, U.S. equity investors are starting from what can only be described as elevated levels. The S&P 500 Index currently trades at a forward price-to-earnings (P/E) ratio of 21. That is well above the historical average of roughly 16 and a good distance away from the rest of the world at just under 14. While it is true that equity performance has broadened thus far in 2024—Japanese equities are enjoying a strong rally and the “Magnificent Seven” are ending their run in favor of the “Fab Four” or maybe the “Terrific Trio”— quite a bit of good news is already priced into the U.S. market. Starting from here, the bar has been set fairly high for earnings to outperform expectations and drive prices higher. We acknowledge that P/E multiples can still expand from these heights, especially if they’re helped along by a pivot to easier monetary policy via interest rates cuts from the Federal Reserve (Fed). 

James F. Smigiel

Chief Investment Officer, Investment Management Unit

Important information

Index returns are for illustrative purposes only and do not represent actual investment performance. Index performance returns do not  reflect any management fees, transaction costs or expenses. Indexes are unmanaged, and one cannot invest directly in an index. Past performance does not guarantee future results. Diversification may not protect against market risk. 

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. All information as of the date indicated. There are risks involved with investing, including possible loss of principal. This information should not be relied upon by the reader as research or investment advice, (unless you have otherwise separately entered into a written agreement with SEI for the provision of investment advice) nor should it be construed as a recommendation to purchase or sell a security. The reader should consult with their financial professional for more information. 

Statements that are not factual in nature, including opinions, projections and estimates, assume certain economic conditions and industry developments and constitute only current opinions that are subject to change without notice. Nothing herein is intended to be a forecast of future events, or a guarantee of future results. 

Certain economic and market information contained herein has been obtained from published sources prepared by other parties, which in certain cases have not been updated through the date hereof. While such sources are believed to be reliable, neither SEI nor its affiliates assumes any responsibility for the accuracy or completeness of such information and such information has not been independently verified by SEI. 

The information contained herein is for general and educational information purposes only and is not intended to constitute legal, tax, accounting, securities, research or investment advice regarding the strategies or any security in particular, nor an opinion regarding the appropriateness of any investment. You should not act or rely on the information contained herein without obtaining specific legal, tax, accounting and investment advice from an investment professional. 

Information in the U.S. is provided by SEI Investments Management Corporation (SIMC), a wholly owned subsidiary of SEI Investments Company (SEI).

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