The Stock Market Just Did Something For the 3rd Time in Over 100 Years. If History Is Any Guide, Prepare For This to Come Next.
Stocks look expensive when viewed through a long-term lens.
Overview
Earnings per share (EPS) for the S&P 500 grew at 52% year over year in second-quarter 2026, according to FactSet estimates -- one of the fastest rates of growth in market history. It is also unsustainable.
Big tech companies are benefiting from reported earnings gains from artificial intelligence (AI), which are dragging down free cash flow, while also marking up stakes in start-ups and recent IPOs like SpaceX, which is inflating S&P 500 earnings power.
Details
The market now trades at a forward price-to-earnings ratio (P/E) under 20, which does not look unreasonable. However, if you take a more comprehensive look at the cyclically adjusted P/E ratio (CAPE), this stock market has done something that has only happened twice before.
Source
Originally published at www.fool.com.