The move lower in stocks this week naturally has investors wondering if this is just a speed bump in the really or the start of a more serious correction.
Exchange traded funds (ETFs) for the major stock indexes have risen the first four months of the year — iShares S&P 500 (NYSEArca: IVV) is up about 8% year to date with a slight drop-off seen in recent days.
Should investors sell in May and go away? One year after the May 6 flash crash, investors know this is when stocks fell in 2010.
However, some analysts think the S&P 500 does have room to run up for the rest of this year. Russ Koesterich, iShares Global Chief Strategist, says the aspects to pay attention to are margins and multiples.
Profit margins are important and the high commodity prices mixed with high energy costs may tug on this. However, many companies are finding historically cheap labor and capital, so the prospects remain stable for now, he says. [Now What For S&P 500 ETFs After Rally.]
Multiples will get a push from multiple expansion or rising price-to-earnings (P/E) ratios. Fading deflation threats and large cap valuations that are still reasonable are good signs, Koesterich argues.
iShares S&P 500
Tisha Guerrero contributed to this article.