Markets

The S&P 500 just passed its highest valuation level in almost 18 years

Key Points
  • The S&P 500 valuation on Wednesday passed 19 times forward earnings, the first time it has hit that mark since May 2002.
  • The landmark comes with the index up more than 400% off its March 2009 lows.

Market valuations continue to get richer as the bull run nears its 11-year anniversary, with one measure at its highest point in nearly 18 years.

As of Wednesday, the S&P 500 traded at 19 times 12-month forward earnings, the highest the P/E level has been since May 23, 2002, according to FactSet calculations released Friday. While that is high compared to historical averages, it still sits below the 20-year peak of 24.4 set on March 24, 2000, just before the dotcom bubble burst.

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The number is well above its most recent trends. The current P/E level has eclipsed the five-year (16.7), 10-year (14.9), 15-year (14.6) and 20-year (15.5) averages, FactSet reported.

Nine of the 11 S&P 500 sectors have valuations higher than their 20-year averages. The only group below is energy, while real estate was only recently carved out as a sector so it does not have that long a history.

The jump in valuation has come as the large-cap index recently eclipsed a 400% gain since its March 2009 low as the financial crisis was coming to a close.

FactSet analysts note that the valuation level would be higher were it not for Wall Street expecting record earnings over the next two years.

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