✒ TL;DR: the value of a firm to its shareholders, is the present value of the firms future’s cash flow — meaning share price is sensitive not only to changing expectation of future profits, but also the discount rate used to calculate what those are worth today.
Robert Shiller published the “excess CAPE yield” numbers in November which are calculated by inverting the CAPE (cyclically adjusted price-to-earning) ratio, to give an indication of expected yield on equities, and then subtracting the expected real returns on holding bonds, which are negative due to low rates and modest inflation expectations over the next decade. The current yield is actually higher than in January.
The excess yield analysis shows that equities have become more attractive than bond, at first because bond yield fell so quickly, plus lately because of the progress of vaccine leading to the return of growth and profits.
This might at least partly explain why the S&P 500 benchmark index earned 14.3% in 2020, about double the typical return over the past 20 years.