As of late March 2025, the S&P 500 (SPX) is trading at a forward 12-month price-to-earnings (P/E) ratio of 20.5, which exceeds both the 5-year average of 19.9 and the 10-year average of 18.3. This valuation reflects a market that is considered neither cheap nor expensive. The trailing 12-month P/E ratio stands at 25.5, also above its 5-year average of 24.6 and 10-year average of 22.3. Analysts note that the current P/E levels are approximately six points higher than the median since 1985, indicating a historical premium of about 25%. Despite these elevated valuations, market participants are pricing in a potential economic boom rather than weakness, as evidenced by the S&P 500's 9% increase since pre-rate cut levels in August. Furthermore, seven out of eleven sectors in the S&P 500 have shown strength year-to-date, suggesting resilience in the equity markets amidst concerns about high valuations.