Deflated: falling valuations drag stock prices down to earth

By DAMIAN J. TROISE
AP Business Writer

Stock valuations are falling fast, giving investors a potential opportunity to snap up stocks that may have been overvalued just a year ago. Take industrial bellwether Caterpillar Inc. Last year the Illinois-based heavy machinery manufacturer was trading at 27 times earnings. Now, with inflation at a 40-year high and the Federal Reserve ratcheting up interest rates at the fastest pace since Pink Floyd’s “The Wall” was in the charts, investors have having second thoughts about how much to pay for stocks.