The S&P 500 is attractively valued after a deep sell-off and with bond yields still historically low, says JPMorgan's head of stock research

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., March 2, 2020.Brendan McDermid/Reuters

  • The S&P 500’s value remains attractive even after a recent rebound lifted its price-to-earnings ratio sharply, JPMorgan said.

  • The broad index’s P/E ratio has jumped but is “still cheap considering low bond yields,” according to a research note Thursday.

  • “In sum, if economic growth and rates hold, we believe the S&P 500 is well supported at current levels,” the note said.

The S&P 500’s value remains attractive even after a recent rebound lifted its price-to-earnings ratio sharply, according to analysts from JPMorgan.

The broad index’s P/E ratio has jumped to 16.9 from June’s low of 15.5, according to a research note Thursday. While that is in line with historical levels, it’s “still cheap considering low bond yields,” analysts led by Dubravko Lakos-Bujas said.

JPMorgan also said the S&P 500 is “better than fairly valued” as the index has shifted to a mix of stocks that are less cyclical with higher profit margins over the last few decades.

That means possible good news for investors, after the S&P 500 saw its worst first half since 1970 amid high inflation and growing recession fears.

Meanwhile, JPMorgan doesn’t full-year earnings declining even after a slew of disappointing second-quarter results that slammed high-profile stocks this week. As downgrades to guidance hit estimates, overall earnings should look stable, they said.

“In sum, if economic growth and rates hold, we believe the S&P 500 is well supported at current levels,” the note said.

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