The U.S. equity market faces two immediate headwinds. First, earnings revisions are likely to remain negative for another two or three quarters. Second, the SPX is now trading on a forward PE of 19.5x, significantly higher than the 20-year mean of 17x. The double whammy of earnings downgrades and moderately expensive valuations suggest equities will remain choppy for another quarter or two, likely until the end of negative revisions is in sight.

Read the full report from Kevin Hebner, Managing Director, Global Investment Strategist for Epoch Investment Partners