The U.S. stock market stands 4% higher today compared to a year ago, despite the death and destruction unleashed by the coronavirus pandemic.
Although more than 80,000 Americans have died and over 33 million have lost jobs, Wall Street has swiftly recovered from the initial shock delivered by the health crisis. The S&P 500 has spiked 31% since the March 23 lows.
The rapid recovery on Wall Street has lifted market valuations into ultra-rich territory. The S&P 500 now trades at 22.5 times projected earnings, according to Refinitiv, the most expensive valuation since October 2000 during the bursting of the dot-com bubble.
Some experts are warning this euphoria could set the stage for a major setback in the stock market given the steep challenges that still exist.
Even Goldman Sachs, which is bullish on stocks in the long run, is warning clients to brace for a bumpy ride this summer. The investment bank expects the S&P 500 will plunge back to 2,400 over the next three months, representing a potential decline of 18%.
