Valuation – S&P 500 Forward P/E Ratio vs. 10-Year U.S. Treasury Yield The 10-year U.S. Treasury yield surpassing 4.5% is creating a headwind for equity valuations and potentially dampening investor sentiment. Image: Morgan Stanley Wealth Management
Percentage Contribution of Returns Between Dividends, Earnings and Valuation While multiple expansion has played an important role in boosting S&P 500 returns, future performance may depend more on earnings growth. Image: Goldman Sachs Global Investment Research
Valuation – 12-Month Forward P/E Ranges (MSCI Regions) While the U.S. stock market has shown impressive performance, the substantial divergence between current valuations and historical averages prompts critical questions regarding its long-term sustainability. Image: Goldman Sachs Global Investment Research
Valuation – S&P 500 Concentration Median P/E While the current median P/E of the top 10 stocks relative to the S&P 500 median P/E is historically high, it is still below the peaks seen during major market bubbles like the dot-com era and the Nifty Fifty period. Image: Ned Davis Research
Valuation – S&P 500 CAPE Ratio While a high CAPE ratio typically suggests lower expected long-term returns, it does not guarantee immediate market corrections. Currently, there are no signs of an economic downturn. Image: Deutsche Bank
Valuation – P/E Ratio of the Top 10 and Remaining Stocks in the S&P 500 Investor concerns regarding the high valuation of the S&P 500 and its top 10 stocks are growing, particularly as historical data suggests that elevated valuations can lead to subpar performance. Image: J.P. Morgan Asset Management
Valuation – Market Capitalization of Stock Market / M2 Money Supply The current high market capitalization of U.S. equities relative to M2 suggests that investors are anticipating very optimistic future earnings and a stable economic outlook. Image: Gavekal, Macrobond
S&P 500 Valuation Metrics While the current forward P/E ratio of 21.6x for the S&P 500 is high by historical standards, it has moderated somewhat from its recent highs. Image: Goldman Sachs Global Investment Research
S&P 500 Valuation – Shiller’s Cyclically-Adjusted Price-To-Earnings (CAPE) Ratio The Shiller CAPE ratio currently exceeds historical norms. While valuation metrics aren’t reliable timing tools, investors should be aware that prolonged periods of high valuations typically lead to lower future returns. Image: Morgan Stanley Research
S&P 500 Valuations According to a macro model developed by Goldman Sachs, U.S. equities are suggested to be overvalued by more than 40%, raising concerns among market participants about long-term sustainability and future market corrections. Image: Goldman Sachs Global Investment Research
U.S. Stock Market Valuations – Combined P/E Ratio High P/E ratios in U.S. tech stocks reflect both their potentially high valuations and investors’ overly optimistic dreams of future growth. Image: Topdown Charts