Chart is for illustrative purposes only. Past performance is not necessarily an indication of future results.
U.S. equity investors are understandably encouraged to see the S&P 500 back near all-time highs, but rising stock prices have also revived concerns that the market may be overvalued.
At roughly 20.2x forward earnings, the S&P 500’s valuation is broadly in line with its average since 2020, even if it remains above pre-Covid norms. Importantly, profitability is also stronger than in prior periods. Net margins are well above their long-term historical averages, likely reflecting improved operating efficiency and resilient business models. As a result, we believe higher margins justify the level of current P/E ratios when compared to history. Consensus earnings expectations are also robust, with growth projected at 31% this year and 13% in 2027 — both well above long-term historical averages.
Given these factors, we believe the market’s current P/E multiple appears reasonable. Therefore, we do not view U.S. equities as being in bubble territory, and we remain constructive on the asset class.
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The S&P 500 Index: The S&P 500 Index is a stock‐market index that tracks the performance of 500 of the largest publicly traded U.S. companies, weighted by their market capitalization, and is widely used as a benchmark for the overall U.S. equity market. Investors cannot invest directly into an index.
The price-to-earnings (P/E) ratio compares a company's share price with its earnings per share (EPS). Forward P/E ratio is a valuation metric that compares a company’s current share price to its projected earnings per share (EPS) over the next 12 months or fiscal year.
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MARK-989146-2026-08-19