US equity valuations reach near two-decade high after rally

The US stock market has surged over the past month despite the damage to corporate profits from coronavirus, pushing one popular measure of equity valuation to its most expensive in nearly two decades. Corporate earnings are set to tumble this year as economic activity slows, wiping a third from company profits in 2020 compared with last year, Goldman Sachs estimates. At the same time, the US central bank’s unprecedented capital-market interventions and the government's $2tn stimulus package have drawn investors back into the stock market, dragging the S&P 500 benchmark up 25 per cent since its low on March 23.

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