The U.S. stock market remains highly valued, with the S&P 500's forward price-to-earnings (P/E) ratio at 21x, above both its five-year average of 19.9 and ten-year average of 18.3. Excluding Big Tech, the forward P/E ratio is 19x, still higher than the 2023 market bottom of 16x. The 'Magnificent Seven' mega-cap companies, which account for nearly 30% of the S&P 500's market capitalization, have driven over 60% of the index's gains in 2023 and 2024. However, their heavy concentration has created a significant performance gap with the rest of the S&P 493, making earnings growth critical. A weaker U.S. dollar, down nearly 4% since January, is boosting earnings for multinational corporations and easing foreign exchange headwinds. Approximately 30% of revenues for S&P 500 firms come from overseas markets, according to Morgan Stanley. Wall Street analysts have lowered Q1 2025 earnings estimates, setting a low bar for earnings beats. However, expectations for earnings growth remain high for the rest of 2025 and into 2026, with Goldman Sachs emphasizing the importance of continued growth for mega-cap companies.