Skip to navigationSkip to main contentSkip to right columnADVERTISEMENTSean Williams, The Motley FoolSat, June 6, 2026 at 3:26 PM GMT+2 6 min readDespite the Iran war-driven swoon in March, it's shaping up to be another stellar year for Wall Street and investors. On June 2, the celebrated Dow Jones Industrial Average (DJINDICES: ^DJI), broad-based S&P 500 (SNPINDEX: ^GSPC), and innovation-driven Nasdaq Composite (NASDAQINDEX: ^IXIC) all galloped to record closes.These gains have been fueled by several factors, including:Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »The evolution and proliferation of artificial intelligence (AI)A historically low corporate income tax rate, which powered record S&P 500 share buybacks in 2025.Better-than-expected corporate earningsImage source: Getty Images.But this parabolic move higher for Wall Street may be more precarious than this trio of leading indexes suggests. The stock market is on the verge of making dubious history -- the type that hasn't been witnessed over the last 155 years -- and the implications for Wall Street and investors are downright frightening.On the heels of the AI revolution, the stock market is nearing its priciest valuation in history.To preface this discussion, "value" is a subjective term that varies from one investor to the next. Without a one-size-fits-all blueprint to evaluate public companies, one person's trash can truly be another's treasure on Wall Street.With the above said, there is one valuation tool that consistently cuts through the emotional and subjective aspects of investing: the S&P 500's Shiller Price-to-Earnings (P/E) Ratio. You'll sometimes see the Shiller P/E referred to as the Cyclically Adjusted P/E Ratio, or CAPE Ratio.Unlike the traditional P/E ratio, which is based on trailing 12-month earnings per share (EPS), the Shiller P/E accounts for average inflation-adjusted EPS over 10 years. A more encompassing view ensures that the Shiller P/E maintains its usefulness in any economic climate.Although economists introduced the CAPE Ratio in the late 1980s, it's been back-tested to January 1871, providing 155 years of price-to-EPS data. Whereas the CAPE Ratio has averaged approximately 17.38 since January 1871, the S&P 500's Shiller P/E closed out the June 2 trading session at 42.84.To put this figure into context, the Shiller P/E has exceeded 30 during a continuous bull market only six times over 155 years. Narrowing further, it's surpassed 40 on just three occasions. June 2 marked the highest Shiller P/E Ratio of the current bull market and the second-priciest reading, trailing only the all-time high of 44.19, set in December 1999, just months before the bursting of the dot-com bubble.Terms and Privacy PolicyPrivacy & Cookie SettingsMore Info