We're returning to the cutting edge of the physics that describes how stock prices behave today, as we look backwards and forwards in time to sort out why the U.S. stock market is behaving as it is.
First, let's cover what's going on with the fundamental driver of stock prices: their underlying dividends per share. Our first chart shows what the dividend futures contracts reported by IndexArb indicate that investors are currently expecting to be paid out by S&P 500 companies in 2013:
Next, here's how those quarterly dividends per share translate into trailing year dividends per share, which stock prices more closely track:
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