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S&P 500 Hits New Record Close: Why ETFs Could Gain More
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The S&P 500 has officially notched its first record close on June 27, 2025, since early February. The index has rallied more than 23% since its April 8 bottom, driven by easing investor fears and improving economic forecasts.
Valuations Rise Above Historical Averages
Valuation metrics show the S&P 500 trading above both its five- and 10-year averages. This trend often sparks claims that the market is “expensive.” However, elevated valuations don't necessarily signal an imminent reversal. Historically, high valuations can persist — and even climb higher — for extended periods.
Comparing Today’s Market to the 2021 Peak
According to a chart from Matt Cerminaro, co-founder of Exhibit A, today’s market is notably less expensive than the 2021 stock boom, as quoted on Yahoo Finance. The average stock in the most expensive decile currently trades at 63 times forward 12-month earnings — well below the 104x seen at the 2021 peak.
"Price-to-earnings multiples are a function of investor confidence,” noted Nicholas Colas, co-founder of DataTrek, as quoted on Yahoo Finance. That confidence changes constantly and is not bound by any limits — either on the upside or the downside.
Market Outlook Turns More Optimistic
As tariff concerns fade, economic and corporate earnings forecasts are rebounding. This improving backdrop has prompted Wall Street strategists to turn more bullish on the market’s prospects. Many firms that slashed their S&P 500 targets during the April sell-off have since reversed course.
Out of the 11 major firms that lowered their 2025 S&P 500 targets in April, at least eight have already raised them. The latest adjustment came from BMO Capital Markets' chief investment strategist Brian Belski, who lifted his year-end projection from 6,100 to 6,700.
Earnings Outlook
Belski highlighted that the estimates for the key sectors, including Communication Services, Consumer Discretionary, Information Technology and especially Financials, have room to recover further. Since the start of April, Q2 estimates have declined for 14 of the 16 Zacks sectors.
Estimates for the Tech and Finance sectors, the largest earnings contributors to the S&P 500 index, which account for more than 50% of all index earnings, have also been cut since the quarter got underway. But the revisions trend for the Tech sector has notably stabilized in recent weeks.
ETFs in Focus
The abovementioned bullish outlook puts focus on S&P 500-based exchange-traded funds (ETFs), such as SPDR S&P 500 ETF Trust (SPY - Free Report) , Vanguard S&P 500 ETF (VOO - Free Report) and iShares Core S&P 500 ETF (IVV - Free Report) . These ETFs have gained about 5.2% so far this year (as of June 27, 2025).
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S&P 500 Hits New Record Close: Why ETFs Could Gain More
The S&P 500 has officially notched its first record close on June 27, 2025, since early February. The index has rallied more than 23% since its April 8 bottom, driven by easing investor fears and improving economic forecasts.
Valuations Rise Above Historical Averages
Valuation metrics show the S&P 500 trading above both its five- and 10-year averages. This trend often sparks claims that the market is “expensive.” However, elevated valuations don't necessarily signal an imminent reversal. Historically, high valuations can persist — and even climb higher — for extended periods.
Comparing Today’s Market to the 2021 Peak
According to a chart from Matt Cerminaro, co-founder of Exhibit A, today’s market is notably less expensive than the 2021 stock boom, as quoted on Yahoo Finance. The average stock in the most expensive decile currently trades at 63 times forward 12-month earnings — well below the 104x seen at the 2021 peak.
"Price-to-earnings multiples are a function of investor confidence,” noted Nicholas Colas, co-founder of DataTrek, as quoted on Yahoo Finance. That confidence changes constantly and is not bound by any limits — either on the upside or the downside.
Market Outlook Turns More Optimistic
As tariff concerns fade, economic and corporate earnings forecasts are rebounding. This improving backdrop has prompted Wall Street strategists to turn more bullish on the market’s prospects. Many firms that slashed their S&P 500 targets during the April sell-off have since reversed course.
Out of the 11 major firms that lowered their 2025 S&P 500 targets in April, at least eight have already raised them. The latest adjustment came from BMO Capital Markets' chief investment strategist Brian Belski, who lifted his year-end projection from 6,100 to 6,700.
Earnings Outlook
Belski highlighted that the estimates for the key sectors, including Communication Services, Consumer Discretionary, Information Technology and especially Financials, have room to recover further. Since the start of April, Q2 estimates have declined for 14 of the 16 Zacks sectors.
Estimates for the Tech and Finance sectors, the largest earnings contributors to the S&P 500 index, which account for more than 50% of all index earnings, have also been cut since the quarter got underway. But the revisions trend for the Tech sector has notably stabilized in recent weeks.
ETFs in Focus
The abovementioned bullish outlook puts focus on S&P 500-based exchange-traded funds (ETFs), such as SPDR S&P 500 ETF Trust (SPY - Free Report) , Vanguard S&P 500 ETF (VOO - Free Report) and iShares Core S&P 500 ETF (IVV - Free Report) . These ETFs have gained about 5.2% so far this year (as of June 27, 2025).