2017-02-16 —

Lower valuations don't always cause trouble for the stock market as long as profits grow faster. But for now, the earnings picture is not promising. S&P 500 companies just returned to growth after five quarters of declines. While analysts see income jumping 12 percent this year, the rate appears to be too optimistic given the economy is forecast to grow only 2.3 percent.

After living through years of deflation fear amid the slowest economic recovery from a recession since the World War II, investors are now embracing the prospect of faster growth and higher inflation, underpinned by Trump's pro-growth agenda. Money has flown to banks and companies most geared to an economic upswing in a rally that has added more than $2 trillion to stock value since the election.

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