The Nasdaq is outperforming its counterparts. Leadership in the index
is owed to large-cap names like Cisco (CSCO 15.36, +0.28) and
Amazon.com (AMZN 38.97, +3.13).
The Nasdaq fell to a five-year low in the prior session. The drop
pushed the Nasdaq's price-to-earnings ratio below 27, which is nearly
half the average ratio it carried during the last five years.
Some contend that the low multiple accounts for dampened earnings
expectations related to a weak economic and business environement.
However, basing earnings expectations only on the near term would be a
mistake, since it would fail to account for future earnings under more
typical conditions.