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Jul 8, 12:00 AM
US Stock Market Overbought With Goldman Sachs Indicator Near Record, S&P 500 P/E at 38x, M2 Supply $21.94T, Market Cap to GDP 207%
Economics
Stocks
Business

US Stock Market Overbought With Goldman Sachs Indicator Near Record, S&P 500 P/E at 38x, M2 Supply $21.94T, Market Cap to GDP 207%

Authors
  • zerohedge
  • Steve Burns
  • Barchart
5

The US stock market is exhibiting multiple indicators of overvaluation and potential bubble conditions as of early July 2025. Goldman Sachs' Bull/Bear Market Indicator reached 70%, a level historically associated with market overvaluation, incorporating factors such as US equity valuations, Treasury yield curve dynamics, unemployment trends, and inflation data. The S&P 500 is noted as the most overbought since July 2024, with technical measures including extreme readings on the CNN Fear/Greed index, a high AAII bull-bear spread of +11, and a near 100 reading on the NAAIM survey. Goldman Sachs' price-to-book net leverage is in the 90th percentile over a one-year lookback. The Shiller price-to-earnings ratio for the S&P 500 stands at 38 times, the second-highest level since the Dot-Com Bubble, exceeding 96% of historical valuations. Additionally, the US M2 money supply surged 4.5% year-over-year in May 2025 to a record $21.94 trillion, surpassing the previous high from March 2022. The ratio of US stock market capitalization to GDP reached a record 207%, well above the 2000 Dot-Com bubble peak of 140% and the 20-year average of 123%. Market breadth for the S&P 500 is near the worst level recorded this century, further underscoring concerns about market health.

Written with ChatGPT (GPT-4).

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