Is the S&P 500 too expensive again?S&P 500SP:SPXSwissquoteThe bullish rebound of the S&P 500 index since the beginning of April has been impressive in terms of momentum, with a recovery even more vertical than the rebound of April 2025. This recovery has been technically explosive and is all the more surprising given that fundamental uncertainty has remained very high and that many fundamental challenges are still present. Despite the evolution of the geopolitical situation, the risk of an energy crisis and rising inflation in the coming months is still far from being ruled out. The S&P 500 index and the global equity market have returned close to their all-time highs, while some technical easing signals have emerged. These signals are detailed in the analysis below, which you can access by clicking on the chart just below. A key question therefore arises again: with this rebound, is the US equity market once again too expensive from a fundamental standpoint, in terms of valuation? To answer this question, I review three fundamental valuation indicators, three versions of the Price Earnings Ratio: 1.The standard PE 2.The forward PE 3.The Shiller PE It is the combined message of these three valuation tools that makes it possible to determine whether the S&P 500 is once again in an excessive valuation zone or not. The standard PE is currently trading above its 10-year average and is approaching its higher 5-year average. After the strong valuation compression in 2022, the rebound is clear and brings the market back into a historically elevated zone, without reaching the extreme excesses observed in 2020–2021. This reflects a market that has become demanding again, but not yet in a state of full euphoria. The chart below shows the standard PE of the S&P 500, i.e., its market price relative to earnings over the last 12 months. The Shiller PE provides a long-term perspective. The ratio stands above 40, a historically very high level, close to the peaks observed during the dot-com bubble around 44. This signal is particularly important: it indicates that structurally, the US market is once again expensive, but not yet as extreme as at the beginning of the century. The chart below shows the Shiller PE, i.e., the price of the S&P 500 relative to inflation-adjusted earnings over the past 10 years. The forward PE confirms this reading. The current level is almost back in contact with its upper average of recent years, but it has not yet returned to the peak at the beginning of the year, around 23. In other words, there is still upside potential in terms of valuation despite the rebound in equity markets since early April. The chart below shows the forward PE of the S&P 500, i.e., the price relative to expected earnings over the next 12 months. DISCLAIMER: This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only. The presented idea (including market commentary, market data and observations) is not a work product of any research department of Swissquote or its affiliates. This material is intended to highlight market action and does not constitute investment, legal or tax advice. If you are a retail investor or lack experience in trading complex financial products, it is advisable to seek professional advice from licensed advisor before making any financial decisions. This content is not intended to manipulate the market or encourage any specific financial behavior. Swissquote makes no representation or warranty as to the quality, completeness, accuracy, comprehensiveness or non-infringement of such content. The views expressed are those of the consultant and are provided for educational purposes only. Any information provided relating to a product or market should not be construed as recommending an investment strategy or transaction. Past performance is not a guarantee of future results. Swissquote and its employees and representatives shall in no event be held liable for any damages or losses arising directly or indirectly from decisions made on the basis of this content. The use of any third-party brands or trademarks is for information only and does not imply endorsement by Swissquote, or that the trademark owner has authorised Swissquote to promote its products or services. Swissquote is the marketing brand for the activities of Swissquote Bank Ltd (Switzerland) regulated by FINMA, Swissquote Capital Markets Limited regulated by CySEC (Cyprus), Swissquote Bank Europe SA (Luxembourg) regulated by the CSSF, Swissquote Ltd (UK) regulated by the FCA, Swissquote Financial Services (Malta) Ltd regulated by the Malta Financial Services Authority, Swissquote MEA Ltd. (UAE) regulated by the Dubai Financial Services Authority, Swissquote Pte Ltd (Singapore) regulated by the Monetary Authority of Singapore, Swissquote Asia Limited (Hong Kong) licensed by the Hong Kong Securities and Futures Commission (SFC) and Swissquote South Africa (Pty) Ltd supervised by the FSCA. Products and services of Swissquote are only intended for those permitted to receive them under local law. All investments carry a degree of risk. The risk of loss in trading or holding financial instruments can be substantial. The value of financial instruments, including but not limited to stocks, bonds, cryptocurrencies, and other assets, can fluctuate both upwards and downwards. There is a significant risk of financial loss when buying, selling, holding, staking, or investing in these instruments. SQBE makes no recommendations regarding any specific investment, transaction, or the use of any particular investment strategy. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts suffer capital losses when trading in CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Digital Assets are unregulated in most countries and consumer protection rules may not apply. As highly volatile speculative investments, Digital Assets are not suitable for investors without a high-risk tolerance. Make sure you understand each Digital Asset before you trade. Cryptocurrencies are not considered legal tender in some jurisdictions and are subject to regulatory uncertainties. The use of Internet-based systems can involve high risks, including, but not limited to, fraud, cyber-attacks, network and communication failures, as well as identity theft and phishing attacks related to crypto-assets.