Changes in P/E Ratios During the Current Bear Market

Since the S&P 500 peaked on October 9th, the index is down 17.85%.  As shown, Financials are down the most at 43%, followed by Telecom (-27.5%), and Consumer Discretionary (-20.15%).  The other seven sectors are actually outperforming the index as a whole, and the Consumer Staples sector is actually up 1.64%.  During bear markets, P/E ratios typically contract as prices fall faster than earnings.  During this bear market, the S&P's P/E ratio has risen from 19.62 to 25.67.  This P/E expansion can be attributed to the 3 worst performing sectors.  Financial and Telecom P/Es have both gone negative, and Consumer Discretionary is pretty much negative at 1,402.  On the other hand, five sectors have seen P/E contraction.  Technology has seen the biggest P/E decline, going from 28.19 on 10/9/07 to 21 at current prices.  Utilities, Industrials, Health Care and Energy are the other sectors that have seen P/Es contract.  This is definitely a concentrated bear market, where a couple sectors have caused all the problems.