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Stock prices fell last fortnight. The S&P 500, an index of big American companies, dropped 1% to 3,892. The market continues to rise from its October lows but is still 9% below where it was last year. Fears of a crisis after the collapse of SVB and Signature Bank have spooked investors.

I value the S&P 500 at 3,982, which suggests it is fair value. My valuation has thrashed back and forth in recent months. Significant movements in bond yields and consensus estimates are to blame. Traders and analysts are uncertain about the future, which has shown up in estimates.

The companies in the index earned $1,627bn in the past year. They paid out $516bn in dividends, bought back $981bn worth of shares, and issued $72bn of equity.

The forward price-earnings (PE) ratio shrunk to 16.9x. My 12-month forward earnings per share (EPS) estimate for the index climbed from 229 to 230.

Government bond prices rose as investors sought safety. Yields, which move the opposite way to prices, fell. The ten-year Treasury yield, a critical financial variable, dropped 37 basis points (bp) to 3.6%. Investors expect inflation to average 2.3% over the next decade, down 55bp in the past year.

The real interest rate, the gap between yields and expected inflation, shrunk by 22bp to 1.3%. Still, these inflation-adjusted rates are up over two percentage points in the past year.

Corporate bond prices also went up. Credit spreads, the extra return creditors demand to lend to a company instead of the government, shot up 24bp to 1.8%. While the cost of debt, the annual return lenders expect when lending to these companies, fell 13bp to 5.5%.

Refinancing costs are up 1.5 percentage points in the past year. The ruckus caused by SVB and Signature banks’ collapse has pushed up the price of risk.

The equity risk premium (ERP), the extra return investors want to buy stocks instead of bonds, lept 33bp to 5.3%. It’s now about the same as it was a year ago. The cost of equity, the total annual return these investors expect, fell 4bp to 8.9%. These expected returns are a little above their long-term average.