Unexpectedly Intriguing!
15 November 2007

In preparing the latest update to Political Calculations' signature tool The S&P 500 at Your Fingertips to incorporate the latest price, earnings, dividend and inflation data through October 2007, we noticed that Standard & Poor has now revised the reported earnings (via this Excel spreadsheet) for the S&P 500 in September 2007 significantly downward.

As recently as last month, S&P had put the trailing one year earnings per share for the index at $86.03, an increase of $1.11 over the previous quarter's $84.92 per share. That older figure remains unchanged, however the S&P 500's reported one-year trailing earnings per share has now been set to be 79.16 for the quarter ending in September 2007, with the S&P 500's trailing one-year earnings per share now having decreased by $5.76, a 6.8% decrease from the quarter ending in June 2007.

Going by the spreadsheet linked above, Standard & Poor is now anticipating that the S&P 500's earnings per share will continue to decrease through December 2007, then begin increasing with each quarter in 2008. The trailing one-year earnings per share anticipated in December 2007 is $78.92.

Meanwhile, Standard & Poor has also revised the reported 12-month dividends per share for the S&P 500 for September 2007, with this figure now coming in at $26.97 per share instead of the previously reported $27.06 per share, a nine cent per share decrease. Unlike the revised earnings per share, this is still an 80 cent increase over the trailing one-year dividends per share recorded in the previous quarter ($26.17). At present, S&P anticipates the S&P 500's dividends per share for 2007 will come in at $27.85, just one cent below where they had previously forecast it to be as recently as last month.

In any case, here is our regularly updated table showing the S&P 500's performance in the year-to-date, year-over-year, and since January 1871:

Selected S&P 500 Performance Data Through October 2007
Annualized Rates Nominal Rate of Return (%) Rate of Inflation (%) Real Rate of Return (%)
Since January 1871 9.19 2.08 7.11
Year over Year 14.95 3.54 11.41
Year to Date 12.94 4.32 8.62

Since we're breaking bad news today, which will have the recession hounds flooding and linking this post to gawk at the earnings carnage, we're going to save our historic S&P 500 chart that we had prepared for another day. That's a shame, because it's maybe one of the most remarkable stock market-related charts we've ever seen - and has led to analysis that has nearly completely changed how we view the market. Ah well, maybe in December....

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