The S&P 500 is currently trading at a forward price-to-earnings (P/E) ratio of approximately 21 times next 12-month earnings, which places it at the higher end of its historical valuation range. While some analysts consider the index to be fairly valued based on historical valuation bands of 14x to 20x forward earnings and current earnings expectations, others highlight that the blended P/E ratio of 24 is above the 20-year average of 20. Earnings per share (EPS) estimates for the S&P 500 in 2025 have declined to below $265, down about $10 since the start of the year. Additionally, the Nasdaq 100’s P/E ratio has decreased to 25, which remains above its 20-year median of 20. The combination of rising stock prices, fading EPS estimates, and higher yields has led to concerns about equity valuations being unattractive. Projections suggest that if the S&P 500 reverts to its historical average valuation over the next few years, annual returns could be around 5.5%. Investors aiming for bullish positions would need to accept the possibility that valuations might reach new highs beyond the past decade’s levels.