Stock prices follow earnings growth. The stock market reflects earnings expectations. That’s why analysts are concerned that the Q3 earnings forecast for the S&P 500 is for a decline of 0.3 percent, according to Factset data cited in CNBC. Declining earnings imply declining stock prices. Earnings Growth Going the Wrong Way Because Q2 earnings for the stock market are coming in negative – and Q1 did also at -2.3 percent – there is growing concern about the stock market’s valuation. That’s with good reason. The stock market is presently the second most expensive in history and overdue for a big

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