S&P 500 Valuation Warning Flashes as Shiller CAPE Ratio Tops 40

The S&P 500's Shiller CAPE ratio has climbed to 40.9, marking only the second time in 145 years the metric has crossed 40, trailing only the dot-com bubble peak of 44.2. The valuation milestone follows a 22% rally in the S&P 500 from its March lows, alongside a 30% rise in the Nasdaq and a 15% gain in the Dow Jones Industrial Average. However, macroeconomic headwinds are mounting. Disruptions in the Strait of Hormuz pushed WTI crude to $105 per barrel, lifting August annualized CPI inflation to 3.4% and prompting a 25-basis-point Federal Reserve rate hike.