S&P 500 Rose 14% In A Year And Got Cheaper

SPY rose 14% in a year and its P/E fell from 28.6x to 24.5x as earnings grew about a third, with the Mag 7 delivering half the growth.

On 8 October 2025, JPMorgan Chase & Co. (JPM) Chief Executive Jamie Dimon told the BBC he was “far more worried” than others about a serious market correction. He put the odds near 30%.

A year later, the SPDR S&P 500 ETF Trust (NYSE:SPY) is up 14%. It also trades at a lower multiple than it did on the day Dimon spoke.

In a less obvious way, part of the correction he predicted has already happened. SPY’s price-to-earnings multiple fell while its price rose. The reason is that earnings grew more than twice as fast as the price.

Price Up, P/E Down

A year ago, the market was expensive. SPY traded at 28.6x the past year’s earnings of its companies. A few weeks earlier, its P/E had hit its highest level in almost a decade.

Then earnings went on a run. Over the past year, the price alone climbed 13%. Over the same period, the earnings of SPY’s companies climbed about a third. That gap did the correcting: the P/E slid to 24.5x.

SPY's earnings outran its price: SPY's price and the trailing earnings of its companies, both rebased to 100 on 24 October 2025. On 26 October 2026 earnings stand at 132 and the price at 113.

That still leaves SPY above its median since 2017. It has come down from the top of its range to just above the middle.

SPY's P/E is down from its 2025 peak: trailing P/E at month-ends since April 2017, with a median of 22.7x. It was 28.6x in October 2025 and is 24.5x on 26 October 2026.

Seven Companies, Half The Growth

Split SPY in two, and the picture sharpens. On one side are the Magnificent 7, or Mag 7: Apple Inc. (AAPL), Microsoft Corp. (MSFT), Nvidia Corp. (NVDA), Alphabet Inc. (GOOGL), Amazon.com Inc. (AMZN), Meta Platforms Inc. (META) and Tesla Inc. (TSLA). On the other side are the remaining 493 companies.

The two groups’ share prices moved in step. Both rose between 12% and 13% over the year. Their earnings went separate ways. Mag 7 earnings rose about two-thirds, while the other 493’s rose about a quarter.

That made the seven companies the engine of the year. They delivered about half of SPY’s earnings growth. Their P/E also fell the most, from 39x to 26x.

The Index Tilted Toward Tech

The tilt started long before this year. In October 2017, the Mag 7 produced about an eighth of SPY’s earnings. Today, they produce about a third. Their weight in the fund has followed the earnings up to about the same share.

They are also far better at turning sales into earnings. The Mag 7 keep about 34% of their sales as earnings, compared with about 11% for the other 493. That mix is one reason SPY can trade above its median since 2017: the index now holds a bigger slice of its most profitable businesses.

Mag 7 make a third of SPY's earnings. Left: the Mag 7's share of the earnings of SPY's profitable holdings, 12% in October 2017, 27% in October 2025 and 34% in October 2026. Right: net profit margin in October 2026, Mag 7 34%, other 493 11%.

What Comes Next

Analysts expect the rest of the market to pick up the pace. Their estimates have the other 493 growing earnings faster than the Mag 7 in the fourth quarter. SPY trades at 18.6x the earnings expected over the next 12 months, a multiple that assumes the run continues.

Big Tech’s third-quarter reports continue this week with Microsoft, Alphabet and Amazon.

The biggest tech story of the season is still ahead. Anthropic, the maker of Claude and one of the leaders of the AI market, filed for its long-awaited IPO on Monday. Its Nasdaq debut is expected in mid-November. Investors have talked about a valuation of $1.5 trillion to $2 trillion. If Anthropic raises the $100 billion it is reported to seek, it would be the largest IPO on record.

Anthropic will need time before it can join SPY. The S&P 500 requires a year of trading and positive earnings over the past four quarters. Once Anthropic qualifies, it would be one of the largest additions in the index’s history. It would also tilt SPY further toward tech.

Dimon gave a correction 30% odds. The market took the other 70% and still came out cheaper.

Disclosure: Data as of 26 October 2026. This is not investment advice or a recommendation to buy or sell any security. ETF Copilot receives no compensation from the issuers of the funds mentioned. Managers of ETF Copilot may or may not hold positions in the funds mentioned.

First published in the ETF Copilot newsletter.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.