The S&P 500's P/E ratio has been seeing some pretty rapid expansion this year as the market has charged higher. As shown below, last year at this time the S&P's trailing 12 months P/E ratio was below 14. Now it's up to 16.13.
While the one-year P/E ratio chart above looks pretty alarming, a longer-term chart looks much less so. Below is a chart of the S&P 500's trailing 12 months P/E ratio over the last 15 years. In the chart, we have pointed out where the P/E ratio stood when the S&P hit its highs in 2000 and 2007. As shown, at the March 2000 bull market peak, the S&P's P/E ratio was all the way up at 30.97. At the market's peak in 2007, the P/E ratio was at 17.52. Over the last 15 years the average P/E ratio for the S&P 500 has been 19.58, so at 16.13, the index's valuation is currently 17.62% below its 15-year average.