Most emerging-market stocks advanced, led by industrial and technology companies, amid speculation China’s economy is stabilizing. Indonesia’s rupiah retreated to the weakest level in more than four years.
The broadest rally in U.S. stocks since at least 1990 has lifted shares of everything from the smallest companies to the biggest banks, signaling the bull market for America’s largest corporations will last at least until the end of the year, if history is a guide.
It doesn’t seem possible that anything with the acronym BEER could be harmful to investors. But let’s just say they’ve gotten a wee bit tipsy on the current Bond Equity Earnings Yield Ratio. The ratio, known in Wall Street parlance as BEER, compares the current yield on 10-year Treasury bonds to the earnings yield of stocks. The earnings yield is the inverse of the price-earnings ratio. The theory is if stocks are yielding more than bonds -- a BEER ratio of less than one -- then stocks are cheap.
The biggest quarterly increase ever in the Chicago Board Options Exchange Volatility Index pushed it above 40, a threshold exceeded only three percent of the time in 20 years and a level that has preceded stock rebounds.
Most U.S. stocks advanced, sending the Standard & Poor’s 500 Index higher for a second day, as optimism about takeovers outweighed a drop in technology shares following a report showing lower chip sales.
Stocks in developed nations took 17 months longer than emerging markets to erase losses spurred by Lehman Brothers Holdings Inc.’s 2008 bankruptcy, recovering after the Federal Reserve took steps to stimulate growth.
The highest-returning stocks of the bull market are trailing the Standard & Poor’s 500 Index in September as investors book profits, anticipating that Congress will let tax cuts on capital gains expire at year-end.