economy

January 2, 2026

Any way you look at it, the U.S. stock market is expensive as the new year begins, BofA says

The vibes are good on Wall Street as 2026 begins. There's just one issue: Stocks are really expensive.

Any way you look at it, the U.S. stock market is expensive as the new year begins, BofA says

TL;DR

  • The S&P 500 is considered very expensive based on 18 of 20 tracked metrics.
  • Metrics indicating extreme expense include market cap to GDP, price to book value, price to operating cash flow, and enterprise value to sales.
  • Risks for the S&P 500 in 2026 include a potential slowdown in the labor market due to AI-driven job cuts.
  • A strategist predicts the S&P 500 will end 2026 at 7,100, representing a modest gain.
  • Health care and real estate are identified as inexpensive sectors relative to historical multiples and the broader market.
  • Positive trends in revisions and recent outperformance suggest good value in health care and real estate.
  • Health care and real estate lagged the broader market in 2025, with health care rising around 12% and real estate falling marginally.

Continue reading the original article