Rapid rate rises pressure US stock valuations, AllianceBernstein says
AB•AB•AB•AB•AllianceBernstein found that US equity valuations were more affected by the speed and scale of interest-rate increases than by absolute yield levels. Yield increases exceeding 150 basis points over 12 months coincided with median P/E declines of 2.2 points, while increases below 100 basis points were associated with higher median forward P/E multiples.
AllianceBernstein found that 12-month yield increases exceeding 150 basis points coincided with median P/E declines of 2.2 points, and multiples contracted in 89% of observations. Yield increases below 100 basis points over 12 months were associated with higher median forward P/E multiples.
Treasury yields fell from a 5.31% peak between early October and early November as AI capital-spending-related stocks declined amid increased scrutiny. AllianceBernstein said investors should prioritize valuation discipline and businesses with durable cash flows, strong profitability and dividend growth rather than rely on expanding multiples.
