The S&P 500 (SPX) has experienced significant multiple expansion over the last 12 months, with the forward 12-month P/E ratio reaching 22.2, its highest level in more than three years. According to Goldman Sachs, over half of the S&P 500's trailing 12-month return can be attributed to this big multiple expansion. The last time the forward 12-month P/E ratio was above 22.0 was on April 27, 2021. While multiple expansion can drive short-term gains, its long-term sustainability depends on consistent above-average earnings growth. Higher interest rates also disproportionately impact growth stock valuations, which have led the market recently.