Ahead of the Tape
[Today's Market Forecast]</br></br>Mortal Coil</br></br>The good news about last year's flat stock market? Stocks got cheaper. The bad news? They could get cheaper still.</br></br>In 2005, the Dow Jones Industrial Average had one of the most uninspiring annual performances of its 109-year history, finishing the year down 0.6% -- which is to say almost perfectly flat. The broader market did a bit better, but with the Standard & Poor's 500-stock index gaining 3%, it, too, drew yawns rather than applause.</br></br>But even as the market treaded water, corporate profits grew quickly. Company analysts polled by Reuters Estimates predict that earnings for companies in the S&P 500 increased 13.6% in 2005. Because the S&P 500 went up less than its earnings, it's price/earnings ratio slipped. On Friday, the S&P 500 closed at 16.4 times 2005 earnings. It finished 2004 at 18 times that year's earnings. In fact, it's the lowest S&P 500 P/E ratio in 10 years.