As shown in the table at right, the P/E ratios of the S&P 500 and its ten sectors have jumped significantly since the March 9th low. As the market has rallied sharply, earnings have not been able to keep pace at all, hence a rising P/E. While P/E expansion is normal during a bull market, at some point investors will need to see earnings catch up. This will result in P/Es stagnating or even declining even as the market climbs. Obviously if earnings don't begin to grow as analysts are expecting, the market will have a tough time remaining in rally mode.
The S&P 500's trailing 12-month P/E is currently at 20.13, up 101% from its level at the market bottom on March 9th. The P/E ratio for the Materials sector has jumped the most since 3/9 at 239%, followed by Industrials (+113%), Technology and Energy (+90%). Interestingly, P/E ratios have risen the least for the Consumer Discretionary, but this is skewed because General Motors was taken out of the index in the middle of the rally, and that caused the sector's P/E to fall drastically.
Finally, the Financial sector remains like a kid stuck in the corner in timeout. The sector was the only one to have a negative P/E on March 9th and it continues to have a negative P/E ratio at the moment.