The S&P 500 has experienced one of its strongest two-year gains since 1928, with the largest increase recorded since 1998. Recent market strength reflects heightened growth expectations, particularly in cyclical sectors compared to defensives. However, concerns have emerged regarding U.S. stock valuations, which are considered extremely high. The gap between the earnings yield of the S&P 500 and BBB-rated bond yields has fallen to its second-lowest level in 22 years, indicating that U.S. medium-risk corporate bonds now yield more than the S&P 500. Additionally, the dollar real yield premium has reached a record high, while the S&P 500 is trading at a 60% premium over MSCI China, suggesting a divergence in asset performance between the U.S. and China. Analysts caution that while U.S. equities appear expensive, they may remain so for some time as market dynamics evolve.