S&P 500 – Don’t worry about valuations

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., January 19, 2024. REUTERS/Brendan McDermid

THE S&P 500 Index hit an all-time high last Friday, punctuating its 38% return from the trough in October 2022.

Much of the exciting rally has reflected an expansion of forward price-earnings (P/E) ratios, and there’s a broad sense that management needs to start putting up the profits to justify current valuations.