Investors Brace for More Market Volatility as Earnings Estimates Slump

Corporate-earnings expectations are falling. That means the stock market is again at risk of appearing expensive, even after this year’s tumble.

Wall Street often uses the ratio of a company’s share price to its earnings as a gauge for whether a stock appears cheap or overpriced. By that metric, the market as a whole had been especially pricey for much of the past two years when easy monetary policy propelled major stock indexes to dozens of new highs.

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