S&P 500 P/E Ratio — Market Valuation Gauge
Track the S&P 500 price-to-earnings ratio. A P/E above 25 signals expensive markets; above 30 historically precedes major corrections.
Current Value
Trigger Level: >25 = expensive, >30 = bubble
Historical Trend
AI Analysis
Today's S&P 500 P/E ratio stands at 22.0x, maintaining a flat trend over the past three weeks, with no variation from this level since May 12. This consistent reading indicates that the market is currently perceived as above its long-term average, suggesting a heightened valuation environment. Given the stability at this elevated level, the risk of a recession appears contained for now; however, sustained high valuations could signal potential market corrections if economic fundamentals do not support such prices.
What is the S&P 500 P/E?
The S&P 500 P/E ratio is the index price divided by trailing twelve month (TTM) earnings per share for all 500 companies. It shows how much investors pay per dollar of corporate earnings.
Why It Matters for Recession Risk
High P/E ratios mean investors are paying a premium for earnings, leaving little margin of safety. P/E above 25 has historically preceded below-average future returns; above 30 preceded major corrections.
Historical Context
The long-term average S&P 500 P/E is ~16.5x. It reached 44x during the dot-com peak, fell to 10x in 2008, and has ranged 20-28x in recent years. Mean reversion from elevated P/E typically coincides with recessions.
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