Earnings are driving US equity returns this year
Insightful chart from BlackRock that splits the total equity return into three components: earnings growth, multiples expansion/contraction, and dividends.
Looking at the U.S. AI-linked indices, the majority of equity returns came from earnings growth, with Magnificent 7 even experiencing a multiples contraction. However, indices that excluded Mag7/Tech provided returns from a mix of multiple expansion and earnings growth.
International equity markets were valuation-driven, doing the long-awaited fundamental catch-up phase. China leads the total return, mainly via multiple expansion.
Not all gains are created equal.
Source: BlackRock // #Investing #StockMarket #PortfolioManagement #Markets
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