S&P 500 Valuations Echo Dot-Com Era as Strategists Debate the New Normal
Market strategists are redefining what constitutes normal valuation metrics as the S&P 500 flirts with dot-com bubble multiples. The index now trades at a 40% premium to its long-term forward average, a disparity that narrows to single digits when measured over the past five years—a period dominated by tech giants and AI-driven growth.
Bank of America's Savita Subramanian suggests anchoring to current multiples as the baseline rather than anticipating a reversion to historical norms. Federal Reserve Chair Jerome Powell has voiced caution, labeling markets as "fairly highly valued," yet most analysts reject bubble comparisons, citing structural shifts in earnings and sector dominance.