Monthly valuation ratios spanning from 1934 to present, showing historic trading ranges with percentile bands.
Blue line: Monthly P/E ratio | Gold line: 80th percentile (expensive) | Teal line: 20th percentile (cheap)
The price-to-earnings (P/E) ratio is one of the most widely used metrics for assessing market valuation. It divides the total market capitalization of the S&P 500 by the combined net income of all companies in the index, revealing how much investors are willing to pay for each dollar of corporate earnings.
Historically, the S&P 500 has traded at an average P/E ratio of around 16–17. The ratio fluctuates based on economic cycles, interest rate environments, and investor sentiment. During periods of optimism and low interest rates, valuations expand. Conversely, during recessions or rising rate environments, P/E multiples compress.
The 2008 financial crisis temporarily pushed the P/E ratio to extreme levels (59+) due to collapsing earnings, while the COVID-19 pandemic and subsequent recovery drove valuations to the 35–40 range in 2021. The tightening cycle of 2022–2023 brought multiples back toward historical norms around 20–23, where they remained through 2026.
Current Environment: At its latest reading, the market trades at a P/E ratio reflecting balanced expectations between growth and interest rates. This positioning sits between the historical extremes, suggesting the market is fairly valued relative to long-term averages.
These metrics provide a quick reference for understanding where valuations stand relative to history.
Data Source: S&P 500 monthly P/E ratios are sourced from Multpl.com, which aggregates valuation data from financial markets. Data spans from August 1934 through September 2026.
Percentile Bands: The 80th percentile represents historically expensive valuations; the 20th percentile represents historically cheap valuations. These bands help contextualize current P/E levels against 90+ years of market history.
Calculation Method: Percentiles are calculated across the entire historical dataset using standard statistical methods. The median represents the middle point of the distribution.
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Source: Multpl — S&P 500 P/E Ratio
Disclaimer: This report is for informational purposes only and should not be considered investment advice. Past performance does not guarantee future results. Consult with a financial advisor before making investment decisions.