My message today is short and sweet: the entire rally in the S&P 500 YTD has nothing to do with multiple expansion and everything to do with earnings growth.
I know this because the S&P 500’s P/E ratio has gone nowhere in 2025.
We started this year trading at 24.5x earnings.
And yesterday, the S&P 500 traded at 24.5x earnings.
I charted this below:
Bottom line: stocks are up double digits this year, but valuations have not budged.
That means the entire 13% gain in the S&P 500 can be attributed to one thing: earnings growth.
That’s all for today. Thank you for reading and have a great rest of your week!