The S&P 500 is trading near record highs, with valuations resembling those seen during the dot-com bubble. Bank of America’s Savita Subramanian suggests anchoring to today’s multiples as the new normal. Wall Street is recalibrating due to AI adoption and earnings growth. Despite high valuations, the S&P 500 looks more justifiable in today’s tech-driven market. Fed Chair Powell acknowledges markets are “fairly highly valued.” Strategists debate valuations, with some seeing a potential “melt-up” as investors chase year-end performance.

Market veteran Ed Yardeni notes high valuations, but corporate earnings have kept pace with prices. Technology and Communication Services sectors now deliver 37% of S&P 500 earnings. Analysts believe the current setup doesn’t signal a bubble, citing strong GDP growth and resilient consumer spending as key supports for equities. The bigger risk may be a “melt-up” as investors seek to capitalize on strong earnings expectations and Fed rate cuts.

Read more at Yahoo Finance: Wall Street says high stock valuations may be here to stay