The market’s remarkable resilience to bad news reflects the extraordinarily steady advance in S&P 500 forward earnings. Industry analysts simply haven’t flinched so far. They rarely flinched as forward earnings rose during 49 of the 52 weeks of 2010. Forward earnings has been up every week of this year so far. The consensus estimate of analysts for 2011 rose to a new high of $97.75 per share during the week of March 11. Their 2012 estimate edged up to $111.22.
Investors haven’t flinched much either so far this year. The S&P 500 forward P/E edged down to 13.0 during the week of March 11, down slightly from the year’s high of 13.6 during the week of February 18. Last year, investors flinched noticeably when the P/E dropped from 14.3 at the end of April to 11.5 in early July.